The deal between the President and the Republican leadership appears to avoid a retroactive application of taxes to this year, a relief to many families who lost a parent in 2010.
The potential for ramming through the deal on estate taxes in its present form allowing for a $5 million exemption and 35% rate seems uncertain. Democrats will try to compromise and implement the $3.5 million/45% plan, despite assurances that this deal is not negotiable. It is simply too difficult at this point to determine whether negotiating room will become available. We must remember that the Republican proposal represents a very large step back from the days where they hoped for full repeal, or a $10 million exemption. With luck, our clients will be able to plan for a greater portion of their wealth avoiding IRS coffers, and celebrate what represents a terrific outcome in view of prior potential alternatives. As for the future deficit, lets hope that these tax breaks spur serious job creation and economic growth.