After a separate amendment on the estate tax law was voted on and rejected, Congress approved a tax cut and unemployment Bill for the President to sign at Midnight on 12/17/10. Highlights include:
- Bush income tax cuts were extended for two more years;
- Social Security Taxes were cut for one year;
- Federal estate taxes were eliminated on estates less than $5 million ($10 million per couple); the estate tax rate is reduced to 35% on estates larger than these thresholds.
A few comments. It is nice to see some attempts at bipartisanship. Hopefully, this Bill will stimulate the economy and job growth and our confidence in the economy.
Second, Congress has deferred fixing long-term problems again. There are no required spending cuts. Social Security is an underfunded time bomb. Our aging demographics exert more pressure on Medicare and Social Security. Because of the two-year duration of parts of this Bill, these issues will be at the forefront of the 2012 elections.
Finally, a word on estate taxes and planning. For nine (9) years, estate planning professionals (attorneys, accountants, financial planners) have advised businesses and individuals under ever-changing tax laws that have become a political football. Planned wealth transfer is essential to the future stability of small business and entrepreneurs, which are the backbone of our economy. We need to urge our elected leaders to develop a bipartisan and permanent solution to this issue.
Link to New York Times article: http://nyti.ms/hAWfZT