You make a good point about the estate-planning difficulties posed by the timing and traps set by the current phased-in repeal of the federal estate tax (“Retire the estate tax–for good,” Editorial, April 27). But I believe reform of the current law would be better than repeal.
Most commentaries on this subject fail to address the fact that the tax law changes signed by President Bush also eliminate, less certain exemptions, the “step up” in basis for capital gains taxation. Current tax law allows heirs to sell the property they inherited with no capital gains tax as long as the property is sold at its market value at the decedent’s death.
The federal estate tax repeal thus, to a certain degree, just substitutes one tax for another, with the addition of very onerous record-keeping on the cost basis of property that could very well span many generations.
We had this type of capital gains regime before and it was repealed because it was unworkable. Why bring it back? Let’s simplify the system by raising the current federal estate tax thresholds, possibly including inflation adjustments, and then let families and businesses do their planning. That would be fairer in a social environment where tax revenue will still be needed to fund the needs of a country with a significantly expanding older population and fewer younger workers contributing to the income tax.
