Santa Fe, New Mexico. Far removed from my office in New York City and recently hiking with friends in the mountains of New Mexico, I had a daydream. It goes something like this: That during this election year, the candidates would have a clear non-polarizing debate about the estate tax laws. Well, it must have been the thin air and magnificent beauty of New Mexico was making me light headed and forcing me to have delirious thoughts. I truly suspect that this will not happen.
So if the candidates will not have this discussion then it will be up to us to interpret what they have said so far and leave it to our voter/clients to decide how important of an issue this is to them relative to their overall beliefs about each candidate’s competency, credibility and vision for our country.
Both the President and Senator Kerry are at polar ends of the estate tax debate. For George Bush, the estate tax analysis is quite simple. Contained within the 2001 Economic Growth and Tax Relief Reconciliation Act is President Bush’s fundamental belief that the estate tax exemption must be both expanded and eventually repealed. Although the “repeal” only lasts for one year (2010), every indication points to the fact that the President is trying to make the estate tax repeal permanent. But, as recently reported by a number of news organizations, this position has exposed a significant rift with Republican priorities: Simply put, is it more important to continue cutting taxes or to prevent the budget deficit from mushrooming beyond the its current $400 billion dollar level? Is the (in our opinion unworkable) “carry over basis tax” , which is due to replace the estate tax in 2010 if repeal is made permanent, the best answer to the revenue issue?
Now for the hard part. Just what is Kerry’s position on the estate tax laws? It is difficult to give a fair analysis of his position because neither he nor the Democratic Party, seems to have a policy
position on this subject. However, a careful review of Kerry’s public remarks clearly indicates his platform, as recently reported by the San Francisco Chronicle, encompasses the rolling back of many of the tax cuts passed by President Bush for those earning over $200,000 a year, including income tax rate cuts, capital gains rate reductions, preferential dividend treatment and part of the estate tax reductions. More specifically, the Washington Post reported on April
8, 2004 that Kerry “For the first time detailed his plan to raise the amount of an estate not subject to taxation to $4 million for families and $10 million for family-owned farm”. The article goes on to point out that Kerry would maintain the estate tax for larger estates.
This author has always found it suspicious (and also poorly reasoned) when politicians, such as Kerry, make statements that they are only proposing higher estate tax exemptions for a “family farm”, but ignore every other type of family-owned business. Shouldn’t we be concerned with preserving all types of family owned businesses? Why the emphasis on fruits and vegetables? Thus, it would seem that the candidate should also consider allowing other types of family-owned businesses to benefit from the same estate tax exemption as the family-owned farm. Especially since, the last time I looked, I could not find any family farms in the greater metropolitan areas where we practice, but rather it was quite easy to locate many profitable family businesses.
Both Mr. Kerry and President Bush seem united in their opposition to gay marriage (although Mr. Kerry supports states’ rights to allow same sex civil unions). President Bush is likely to oppose extending any tax benefits (such as the estate tax marital deduction) to gay couples. Whether Kerry would support or oppose such a change is not clear. So there you have it, both candidates’ strengths and weaknesses on estate tax issues exposed. I do not pretend to be short sighted enough to proclaim that any one of these issues should be the rudder that steers a person toward voting for a particular candidate. At the same time, I maintain that clear dialogue and open discussion of these issues should not be merely a subject of a high altitude daydream. With luck, the forthcoming debates will help clarify the candidates’ positions on these issues. Until a future congress and president clarify the rules, we will continue to plan with some uncertainty.