Ok, back on December 7 I wrote that I just could not see our Congressional leaders in Washington allowing an estate tax loophole to exist whereby for the calendar year 2010 there would be no estate tax. Sure, that was how the tax laws in existence read at the time, but who seriously thought that it would be allowed to remain that way. In fact, at that writing the House of Representatives had passed a “patch” that would maintain the 2009 estate tax law for the coming year until the full governmental body could come up with a new game plan going forward after 2010. All it was going to take was for the Senate to agree or offer some amendment that could be reconciled with the House version.
Well was I ever wrong? Honestly, I never would have imagined that our government would be willing to leave some form of tax money on the table. But here we are now heading into the second half of February and nothing has taken place yet. This speaks volumes to the Washington gridlock that I have also previously spoken about and as a validation to that point another senator announces that he will not be running for re-election in November. Democratic Senator Evan Bayh, having served two terms and well liked in his State of Indiana, was expected to be re-elected but instead announced his decision not to go for another term in office. The reason…..”I do not love Congress”. He just believes that it is so excessively partisan that nothing can get accomplished. I commend him on his decision to not keep taking taxpayer dollars in salary if he feels that he cannot justifiably earn it. He prefers to take his public service out into the private sector where on a smaller scale he believes he can make an impact to better people’s lives through such endeavors as education.
So back to the estate tax issue here. All kidding aside, I believe that Congress has really backed themselves into a corner. Had they acted right at the beginning of the year it would not have rattled any feathers to say that that the amended 2010 law was retroactive to January 1. To attempt to construct new law for this year and pass it at any point from here on out on the calendar with the backdating of the effective date to January 1 could be politically offensive, not to speak of the possible question of constitutionality.
Can you just imagine an extremely high net worth individual that passed away since the beginning of the year? Let’s see, keeping it simple! A person dies with a $100 million dollar estate. Given the possibility of passing 100% estate tax free or giving in to Congress and the IRS with a new backdated law that says that persons estate owes $45 million my bet is that the estate says…..See You In Court.
