By dying this year, the New York Yankees' billionaire owner found the sweet spot in the U.S. tax code, exiting this earthly world during a year in which a congressional stalemate has allowed the estate tax to lapse, potentially saving his heirs hundreds of millions of dollars.
Had he died last year and tried to pass his fortune on to his children or grandchildren, they would have faced a 45 percent tax. Had he lived until next year, the rate would have been 55 percent. But George Steinbrenner's death this year, like that of three other known billionaires who have died in 2010, gives his heirs a break. The Federal taxed owed on the Boss' estate is ZERO.
The absence of the federal estate tax stems from the Bush tax cuts of 2001. The Senate Finance Committee has been wrangling over how to reinstate it. Three senators -- Sanders, Tom Harkin(D-Iowa) and Sheldon Whitehouse (D-R.I.) -- proposed a measure last month that would put in place an escalating tax on estates valued at more than $3.5 million, rising to 55 percent, with an extra 10 percent levied on the estates of billionaires.
Of course the estate tax is unfair because it taxes income twice, once when it is earned and again when it is transferred to heirs. It should always be ZERO. But look for it to go be closer to 50% from 2011 until eternity.
Until the issue is settled, the temporary absence of the tax is complicating the financial plans of billionaires and their families and leaving open the macabre possibility that heirs will hope their benefactor will die this year rather than next.
The Obamanation of America goes on forever. The rising taxes will never end~!