Resolution of the Estate Tax Will Help Resolve Other Tax Issues

Although Congress continues to delay action on the estate tax, it seems unlikely that it will allow the reinstatement of the $1 million exemption due to the repercussions that would be faced by both Republicans and Democrats. Once the uncertainty surrounding the estate tax is solved, a path will be cleared to address other Bush administration tax cuts.

Next year, the capital gains rate may increase to 20% while dividends could be taxed at 39.6%. Reactions of investors and companies to this inequality in tax rates may have unintentional harmful effects.

The bottom line is “that the estate tax is the linchpin in resolving the rest of the tax policy squabbles.”

Mark Schoeff Jr., Where Will the Needle Land on the Estate Tax?, Investment News, Aug. 8, 2010 (stating the opinion of Mr. McCrery, a former Republican congressman from Louisiana).

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.