In 2001, the federal estate taxAn estate tax is imposed on the net value of an individual’s taxable estate, after any exclusions or credits, at the time of death. The tax is paid by the estate itself before assets are distributed to heirs. was imposed at 55% on estates over $1 million. Beginning that year, the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. was slowly phased down until 2009, when it stood at 45% on estates over $3.5 million, then this year, when it is completely repealed. But because the 2001-03 Bush tax cuts were never made permanent, the estate tax comes roaring back at full force on January 1, 2011, at that 55% rate and $1 million exemption level.
It doesn’t take a TV scriptwriter to begin speculating on the incentives such tax law changes can induce, although the fourth-to-last episode of Law & Order a few months ago revolved around a plot by high-income heirs to ensure their deathly ill relatives died at the best time for the estate tax. (The detectives were stumped by one case of prolonging a relative’s life rather than snuffing him out, until they figured out it was prolonged into 2010.)
How ripped-from-the-headlines was it? Congresswoman Cynthia Lummis (R-WY) says very, accoridng to the Associated Press:
U.S. Rep. Cynthia Lummis says some of her Wyoming constituents are so worried about the reinstatement of federal estate taxes that they plan to discontinue dialysis and other life-extending medical treatments so they can die before Dec. 31.
Lummis, a Republican who holds her state’s lone seat in the House, declined to name any of the people who have made the comments.
But she said many ranchers and farmers in the state would rather pass along their businesses — “their life’s work” — to their children and grandchildren than see the federal government take a large chunk.
“If you have spent your whole life building a ranch, and you wanted to pass your estate on to your children, and you were 88 years old and on dialysis, and the only thing that was keeping you alive was that dialysis, you might make that same decision,” Lummis told reporters.Share