Where the White House Candidates Stand on the Estate Tax

June 20, 2008

Where the White House Candidates Stand on the Estate Tax

The political debate over the future of the estate tax is being watched closely by those in the philanthropic world, many of whom believe the tax motivates people who inherit wealth to give more to charity.

Not surprisingly, the tax is becoming a key issue for those in the nonprofit world who are sizing up how the contenders for the White House would affect charities if they are elected.

Sen. John McCain wants to cut the tax, while Barack Obama favors maintaining it at the levels that go into effect in 2009.

Their positions on the issue have become much more clear in the past month, as the two candidates have been trading barbs over the tax on the campaign trail.

The current law is complex, and varies by year. This year, heirs may exempt up to $2-million ($4-million for couples) from taxation, with amounts over that level taxed at a 45-percent rate. Next year, however, the exemption increases to $3.5-million ($7-million for couples), with the same tax rate.

If Congress does not act, in 2010 the estate tax will die for one year. In 2011, the law would then revert back to the 2001 rules, with a $1-million tax exemption ($2-million for couples) and a 55-percent tax rate.

Mr. Obama is no fan of the new rules governing the tax. In his book The Audacity of Hope, he said it “would be hard to find a tax cut that was less responsive to the needs of ordinary Americans or the long-term interests of the country” than repeal of the tax.

He proposes maintaining the 2009 levels of a $3.5-million exemption ($7-million for couples) and a 45-percent tax rate.

By contrast, Mr. McCain supports a $5-million exemption ($10-million for couples) and a 15-percent tax rate.

Speaking at the National Small Business Summit this month, he called the estate tax “one of the most unfair tax laws on the books,” adding, “the first step to reform is to keep it predictable and keep it low.”

A summary of the two candidates’ positions on the estate tax, and on other issues affecting the nonprofit world, can be found on The Chronicle‘s Campaign 2008 page.

— Audrey Hill

Comments

I have represented business owners and farmers for over 32 years. No one has ever paid a penny to the Federal Government for Estate taxes because of proper planning. Don’t let the Republicans scare you. The McCain’s would benefit to the tune of 100 million dollars if the tax was repealed. That money could be used to help our elderly cut back on eating cat food.

— bryn eltringham Jun 23, 09:33 AM #

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