Monday, September 24, 2012

Permanent Change on the Way for the Estate Tax?

Jeffrey A. Cooper of Quinnipiac University School of Law makes the case in his recently published paper, Time for Permanent Estate Tax Reform:
In the next four years, preferably in the next four months, Congress and the President must work together to implement their own vision for the estate tax, rather than allowing mere inertia to effectuate choices made by their predecessors. Put simply, the Congress of 2013 must enact permanent estate tax reform.

Unfortunately, that task will not be so simple. In many ways, the challenge facing estate tax reform is but one narrow slice of a far larger problem confronting modern tax policy. In much of the recent past, Congressional action on tax legislation has been dictated by short-term considerations rather than long-term policy goals. Through skillful legislative drafting and genuine compromise, the President and the Congress of 2013 can reverse this trend. I offer this essay as a modest contribution to that effort.

[...] The Congresses of 2013 and beyond have vital decisions to make regarding the future of federal wealth transfer tax policy. To begin, they must make two narrow choices dictated by EGTRRA. They must decide the optimal exemption for our modern estate tax regime and they must revisit the interplay between federal and state estate taxes by determining the ultimate fate of the state death tax credit. 

[...] I have proffered a vision for those two choices: a permanent estate tax exemption of $3.5 million to $5 million with an inflation adjustment and a permanent restoration of the state death tax credit. By enacting these provisions, Congress will right two recent legislative wrongs, shoring up a pillar of our progressive tax system while dramatically simplifying the tax landscape confronting both American taxpayers and state governments.
Unfortunately, however, Congress’s path to these two decisions represents the easy part of its upcoming journey. There is much more work to be done to determine the optimal structure for our wealth transfer system and our tax system more generally—to make the system more efficient, more transparent, and more predictable.
In the field of taxation, as in so many others, Congress and the President have much work to do in the next four years.

Download the full paper here.

Photo credit: Microsoft 

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