More worries for the wealthy? Inheritance tax to jump unless Congress acts
President Obama has proposed moving the top rate to 45 percent with an exemption of $3.5 million per estate. That would be same formula that was in effect in 2009.
However, analysts who follow the issue say not all Democrats support Obama. “The Democrats are all over the map,” says Pete Davis of Davis Capital Investment Ideas, which supplies Washington intelligence to Wall Street firms. “Some are silent or in favor the Republican position, some Democrats would like to see a lower rate,” he says.
As for the Democratic leadership, they are not saying much. In mid-July Senate Majority Leader Harry Reid (D) of Nevada said he did not envision any “big changes” to the estate tax. Under current law, that would indicate the tax would rise on January 1st. House Speaker Nancy Pelosi calls the 2010 renewal of the Bush tax cuts a one-time event in order to get extended unemployment benefits.
In 2010, when the Congress agreed to the current rate of 35 percent with a $5 million exemption, Republicans also agreed to extended unemployment benefits and more generous provisions for the Child Tax Credit, the Earned Income Tax Credit, and a tax credit to help defray a portion of higher education costs. All of those tax credits expire at the end of this year.
According to the Center on Budget and Policy Priorities (CBPP), if Congress does not renew those credits, a married couple with three children and earnings at the 2013 poverty line of $27,713 will receive $1,934 less in tax credits.
