The Future of the Estate Tax

The following is from AP, Senate Panel Weighs Estate Tax Overhaul, Forbes.com, March 12, 2008:

A Senate tax panel on [March 12, 2008] explored ways to overhaul the U.S. estate tax system as Congress struggles with the expiration of estate tax relief in three years.

Senate Finance Committee Chairman Max Baucus, D-Mont., said he wants to reach a bipartisan compromise on estate tax law changes before the current law expires in 2011 and rates shoot up. * * *

The committee heard from three academics whom the panel encouraged to propose far-ranging plans to revamp the estate tax.

For example, Lily L. Batchelder, associate law professor at New York University School of Law, discussed replacing the estate tax system with a comprehensive inheritance tax. Under this regime, an individual “inheriting an extraordinary amount over his lifetime would pay income tax and a flat 15 percent tax on a portion of his inheritance,” she said. She said such a change could be implemented without gain or loss to the U.S. Treasury if the first $2 million in lifetime inheritances were exempt from taxes. * * *

Analysts don’t believe Congress will act on the estate tax issue during a presidential election year.

See also Editorial, New Hope for the Rich, NY Times, March 13, 2008, reflecting the view that estate tax reform is merely a shield for wealthy individuals.  Special thanks to Jennifer Fisk (Texas Tech University School of Law) for bringing this editorial to my attention.