Families are trying to take advantage of the $5,120,000 gift tax exclusion before it is reduced on January 1, 2013, to $1,000,000. On that same date the estate and gift tax rate will increase from 35% to 55%. Will the tax laws really change? There are (at least) 4 possible outcomes: $5,000,000 exclusion (Congress will pass a law to keep it this way); $3,500,000 (President Obama’s view); $1,000,000 (it will become unless the law changes); and zero (estate tax repeal). What are each possibility’s chances? This is a pure guess: 50% it will stay at $5,000,000 (Congress will view a reduction to $1,000,000 as an increase in the hated “death tax); 10% it will drop to $3,500,000 (only President Obama supports this); 10% it will drop to $1,000,000 as currently scheduled (again, viewed as a tax increase); and 30% repeal of the estate and gift tax laws. The possibility of complete repeal increases with the likelihood that Governor Romney will become President (17.3% according to FiveThirtyEight.com on September 29, 2012).
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