Don’t Die In 2013
In 2013, the estate tax (which returned in 2011 after being gone for all of 2010) gets hiked up to pre-2001 levels, meaning that if you die more than half of your estate could be seized by the government.
The 2001 tax relief bill (EGTRRA), drastically reduced the impact of the death tax over the course of a decade, so that it was eliminated entirely for one year in 2010 — a good year to die, joked a number of pundits. The bill lowered marginal rates and increased the applicable exclusion amount, but it also included a provision allowing individuals to carry over exclusion dollars that were unused by their spouse at the time of his or her death. This “portability” measure effectively increased the applicable exclusion for many households, in some instances putting millions of dollars beyond the reach of the federal government.
The death tax rose from the grave at the end of 2010, with a Bush-era top rate of 35% and an applicable exclusion amount of $5 million ($5.12 million in 2012).
In 2013, the death tax will revert to its antiquated, pre-2001 form. The applicable exclusion amount will plummet to $1,000,000, and the top marginal rate will leap twenty points to 55%. A 5% surtax will also return, to be levied on estates between $10 million and $17 million. This raises the top effective rate of the death tax to 60%.
The estate tax wouldn’t kick in until $1 million in wealth in 2013, but for small business owners (see: farmers, etc.) it’s pretty easy to get over that $1 million threshold by the time you start counting in property, equipment, etc., etc.
Which is great for lawyers and life insurance companies, who make a lot of money helping people mitigate the impact of the death tax. But it’s bad policy. It hurts businesses, particularly small and family-owned businesses, and it’s premised on a false economic assumption which is that estates must be broken up to spread wealth within society.
Pure socialist hokum.Tags: death tax