George
Steinbrenner’s death may turn the tide. And I don’t mean for the Yankees. By
dying this year, Steinbrenner’s billionaire-estate will pass tax-free to his
heirs, thanks to Congressional dallying that has allowed the estate tax to
lapse this year. This is the first “gap” in the estate tax since it was enacted
in 1916.
I’ve been reading
about Steinbrenner’s estate in nearly every news outlet on the internet, but I
think The
Associated Press explained the situation most succinctly:
Forbes
magazine has estimated Steinbrenner's estate at $1.1 billion. The federal
estate tax in 2009 was 45 percent, with the $3.5 million per-person exemption.
If he had died last year, his estate could thus have faced federal taxes of
almost $500 million, depending on how the estate was structured.
Pundits across the
country (and across the internet) are saying that Congress will surely take
some action now. Steinbrenner is the fourth multi-billionaire to die this year
(the others were Dan L. Duncan, Walter Shorenstein, and Mary Janet Morse
Cargill). It’s hard to deny the significance of such events in a year when
there is no estate tax. And Steinbrenner’s celebrity will surely draw
Congressional attention to the issue. One way or another, I think we are going
to see the estate tax become a hot topic of debate in Washington.
If Congress continues to put off dealing with the estate tax, it will come back with a vengeance in 2011. The law currently on the books provides for a $1 million coupon (in other words, each person will be able to pass on up to $1 million estate tax-free), and a whopping 55% rate on every dollar over $1 million.
Darl Gleed
Hey Scott – Timely post! Steinbrenner would have been pleased to know he won the tax game – at least temporatily – until Congress wakes up and tries to retroactively re-impose it.