The Wall Street Journal reported today that President-elect Barack Obama and congressional leaders plan to move soon to block the estate tax from disappearing in 2010. Under the Obama plan detailed during his campaign, the estate tax would be locked in permanently at the rate and exemption levels that took effect this year. That would exempt estates of $3.5 million ($7 million for married couples) from any taxation. The value of estates above that amount would be taxed at 45%.
Under current laws, the estate tax will be repealed for one year (2010) and would then revert in 2011 to Clinton-era levels. This would only exempt estates of $1 million ($2 million for married couples) from any taxation and estates above that amount would be taxed at 55%. According to the article, the Democrats believe that if they don't act now, it will be politically harder to go ahead with their plan to resurrect the estate tax once it disappears in 2010.
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