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The subject of taxes was a contentious topic during the recent elections. There was much argument in Florida and elsewhere regarding whether the extremely wealthy in the U.S. were paying their fair share of the tax burden. A major part of the debate was the estate tax, which is mostly paid by the wealthier Americans on assets obtained through inheritance. Now with the end of the Bush-era tax cuts on the horizon, the President is proposing his own plan for the estate tax.
However, the Democrats have not all uniformly stood behind the President’s plan regarding the estate tax. The White House plan proposes to increase the estate tax to 45 percent for inherited assets after the first $3.5 million exemption before any tax applies. Currently the rate is 35 percent after a $5 million exemption. If Congress does not pass any legislation, the tax rate will automatically increase to 55 percent after $1 million.
Although some Democrats have supported the President’s proposal to raise the estate tax, others within the party want the estate tax to maintain its current rates. One Democratic senator from Montana opposes raising the estate tax because Montana farm owners would be negatively affected. Other Democratic lawmakers that oppose the increase in the estate tax include senators from other rural states.
Those in Florida and elsewhere who are looking to plan their estate for their heirs will want to keep an eye on the latest developments in the estate tax changes. There may be a variety of estate planning options available for those who wish to minimize their tax liabilities on their estates. This will require an understanding of basic estate and taxation laws.