The Estate Tax Is Back, But Bite Might Not Be So Bad
Old As The Nation
Estate taxes are an obvious hot issue. While conservatives decry them, and most taxes, as taking money out of people's hands, billionaire Warren Buffett and other 'high enders' tried stopping the estate tax holiday for this year—saying they were necessary for a strong economy and culture.
Either way, Americans should be used to some sort of inheritance tax by now.
The first estate tax came in 1797 to help re-arm the U.S. navy and lasted four years. Jump to 1862, during the Civil War, and there was a direct tax on inheritances, but that ended in 1870. Another estate tax popped up in 1898 with a top rate of 15 percent on estates worth more than $1 million to help pay for the Spanish-American War. It ended in 1902.
The 'modern' estate tax started in 1916, with a top rate of 10 percent on estates over $5 million. Rates and caps have changed over the years, once reaching a high rate of 70 percent in 1935. But as part of the Bush tax cut program of 2001, the tax was eliminated in 2010—only scheduled to return next year at the dreaded 2009 rates.
But those having to pay at any rate in 2011 will miss this year's tax reprieve.
"Most people are just more or less resigned to it from what I see," says Mason. "But the people who are more upset are the ones on the cusp. Without the tax being indexed to inflation which is something Congress should do, it leaves a lot of people wondering if they will get hit with it."
The wondering has revived the morbid joke of 2010.
"It's weirdly amusing to say but it's like the late New York Yankee owner George Steinbrenner," says Green. "If you had to pay the estate tax and you had to die, this was the year."