While we keep counting down until the Bush tax cuts expire, there is another concern cropping up in 31 days: the death tax!
If Congress does nothing, and raise your hand if you'll be surprised if that happens, the death tax jumps from 0% to 55% on Jan. 1!
That tax would apply to estates of a $1 million or more, which is nearly 2% of estates in this country, and would generate nearly $34.5 billion.
This deadline should not come as a shock to those on the hill, it's been in place since Bush signed the plan back in 2000. However, procrastination and lack of agreement has left us facing a ridiculous tax in just 31 days.
In the last few days there has been some movement on fixing the issue, with three plans leading the discussion.
Let's take a look:
First there's the Tea Party plan sponsored by South Carolina Sen. Jim Demint. This plan would permanently repeal the death tax all together, a noble goal--but let's face it--not very likely of passing.
Then there's the Harry Reid plan: he would make the death tax 45% of estates worth more than $3.5 million. That would impact a quarter of a percent of U.S. estates and generate just over $18 billion in revenue.
And third: Senators Jon Kyl, an Arizona Republican, and Blanche Lincoln, an Arkansas Democrat have managed to reach a compromise. They want the tax to be just 35% on estates worth more than $5 million!
That means only 0.1% of families will have to dole out exorbitant amounts after the death of a loved one and it would still generate more than $11 billion. Too bad Sen. Lincoln is finishing up her time in office thanks to the last election so who knows if this plan has a shot.
Right now Congress is too busy fighting with each other over the Bush tax cuts and the same argument applies - it doesn't take a lot to get to a million dollars - and these people shouldn't be forced to pay taxes on top of taxes just because Congress couldn't focus on more than one thing at a time!