Obama budget assumes estate tax stays the same

The estate tax — sometimes referred to as an inheritance tax or derisively as a death tax — is one of the quirkiest taxes on the books. Here's why: Right now, the estate tax exempts the first $3.5 million and has a top rate of 45 percent. That rate, though, is set to expire at the end of 2009. In 2010, there will be no estate tax. (We really hope nobody is tempted to off their wealthy relatives in 2010.) In 2011, the estate tax comes roaring back, at an even higher rate than in 2009.

The reason for this strangeness is that many of the tax cuts implemented by President George W. Bush will expire in 2011. It's widely expected that Congress will take action this year to change the law for 2010 and 2011.

President Barack Obama has proposed leaving the 2009 estate tax with its top rate of 45 percent in place going forward. Tax documents from the Obama administration incorporate that change into budget projects.

Congress still needs to act to change the estate tax law, and that hasn't happened yet. It seems likely, however, that it will happen before the end of 2009 when the tax expires. We'll be watching for that and meanwhile rate this promise In the Works.