Super Committee May Reduce Deficit by Targeting Gift Tax

The twelve-member Joint Committee on Deficit Reduction (the Super Committee) has the task of finding $1.5 trillion in deficit reductions over ten years by reducing expenditures and increasing revenues. According to Handler Thayer LLP, the 2012 gift tax exclusion may be at risk.

Some speculate that the Super Committee will reduce the threshold for GST and estate tax to $3.5 million and will reduce the gift tax threshold to $1 million. Dave Berek, Partner in the Advanced Planning and Family Office of Prative Group at Handler Thayer, LLP said:

Given the current ‘Buffett Rules’ tax-the-rich environment, overall tax planning and gift tax thresholds that are now available could be at risk for families. We recommend engaging in planning sooner rather than later; not much good can come from the committee’s recommendations from a wealth preservation perspective.

See Handler Thayer LLP Tax Alert: LEGISLATIVE RISK—Super Committee Warrants Immediate Consideration of Your Long and Short Term Estate Planning by Year End, MarketWatch.com, Oct. 27, 2011; Adam Bair, Super Committee May Target Gift Tax For Deficit Reduction, Wealth Strategies Journal 2.0, Oct. 28, 2011.

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