What’s Going On With The Death Tax?

I’ve just finished reading a press release from the National Cattlemen’s Beef Association and cosigned by 49 other organizations representing small businesses. This ad hoc group sent a letter to the House and Senate regarding ‘the failure of Congress to take action on the estate tax, commonly known as the death tax, prior to adjourning for the November elections.’ The 50 organizations signing the letter represent the Family Business Estate Tax Coalition. This powerful coalition believes family businesses, including farms and ranches, need immediate resolution because on the first day of the New Year, the estate tax rate will revert back to the pre-2001 level of 55% and the exempted amount will fall to $1 million. Toss in additional inheritance taxes imposed by some states and the word ‘confiscatory’ comes to mind. It doesn’t take much for a farm or ranch to be valued at over a million dollars. A modest house, a barn, a few hundred acres near a city or town of any size and, all of a sudden, you’re a cash-poor millionaire. The death tax, or whatever other euphemism you want to use, is a tax imposed on the transfer of the "taxable estate" of a deceased person. It’s part of the Unified Gift and Estate Tax system in the United States. The other part of the system, the gift tax, imposes a tax on transfers of property during a person's life; the gift tax prevents avoidance of the death tax should a person want to give away his/her estate while he/she is still around to accept the profound thanks of his/her offspring. Standing just behind the IRS with outstretched hands and looking for their pound of flesh are many states that also impose a death tax, with the state version called either an estate tax or an inheritance tax. Forgive me the analogy but a mental image of hyenas picking a carcass clean after the lions have left comes to mind...more