Just Who Benefits From Congress Doing Nothing About the Estate Tax?
Many know that this year and for this year only there is no estate tax. Anyone can die, and his or her estate will not be taxed. Next year, if Congress does not pass a new law, the applicable exclusion amount reverts to $1,000,000 per person – the same as it was in 2001.
Who benefits by Congress (and the President) doing nothing? It could be argued that in the short run, the number one beneficiary is politicians from both political parties. It is a campaign issue especially for Republicans. Republicans use the fact that Congress has not passed a bill addressing this issue with their supporters as an issue that needs to be dealt with and the higher the applicable exclusion amount the better. Democrats, on the other hand, take the opposite approach, arguing that the estate’s of the wealthy should have to pay and also believe that this is a way to raise tax money for all of the programs they have been creating.
The individual States also benefit as the reinstitution of the federal estate tax will bring revenue to states like California that have coupled themselves with the federal government. This would be a benefit to many states treasuries especially in the short run.
Another beneficiary is insurance companies. Irrevocable life insurance trusts are not nearly as popular when there is not an estate tax or when the applicable exclusion amount is $3.5 million per person as they are when the applicable exclusion amount is $1 million per person.
Similarly, charities by and large like the estate tax. Why? The belief is that people will leave money to charity instead of to the government. Therefore, the people who run our hospitals, museums, universities, etc. are generally in support of the estate tax because taxpayers will create charitable remainder trusts; charitable lead trusts; and private foundations.
That leads me to the final group who benefits when the estate tax affects more people and that is estate planning attorneys. Our services are needed more than ever. All types of trusts for all types of estates will be needed!
