Estate Tax

President Obama has proposed what may be the most popular tax increase in American history: He wants the biggest banks to fork over about $9 billion a year for the next decade via a "financial crisis responsibility fee." "We want our money back, and we're going to get it," Obama declared Thursday. That probably was something of a shock to Goldman Sachs Group Chairman Lloyd Blankfein, for one. He must have figured he had paid in full in July, when Goldman wrote checks for $11.1 billion to return government capital received in 2008 under the financial-industry bailout program.

Congress is returning to work to try to complete some unfinished business -- and take on some new initiatives in the time before lawmakers turn their attention to the November elections. All 435 members of the House and one-third of the Senate are up for reelection this year, creating a charged partisan environment. Many lawmakers will want to dodge controversial votes that can be used against them by their election opponents. That is particularly true in the House, where Speaker Nancy Pelosi (D-San Francisco)

Neutralize elections Re "Wealth often isn't the key to an office," Dec. 20 Implied in your headline is that money often is key to an office. When that is the case, democracy is not served. Meg Whitman talks of having a $150-million campaign. That means I am going to be assaulted with Whitman commercials, direct mail and robotic phone calls. I already do not like her, and I have no idea what she stands for. We want spirited debate and clear ideals to propel a candidate into office, and that will only happen if we neutralize big-money elections.

The old saw about the only certainties in life being death and taxes isn't quite right: We'll also always be arguing about the taxation of death. Because of squabbling in the Senate over the estate tax -- one of the nation's most controversial levies -- taxes will rise for thousands of middle-class heirs while falling for a small number of the very wealthy. The troubles began with reforms approved by the Republican-dominated Congress in 2001, which led to a gradual decrease in estate taxes.

The House of Representatives on Thursday voted to make the current estate tax rate permanent -- just weeks before the tax was scheduled to expire for a year. The measure, which passed on a 225-200 vote, locks in the current rate of 45% for inheritances over $3.5 million. The bill now faces an uncertain future in the Senate. If Congress fails to act by the end of the year, the tax will disappear for 2010, but then return in 2011 at a rate of 55%, with the first $1 million exempted.

Few taxes raise less revenue or make less sense than the federal estate tax. It is scheduled to be temporarily eliminated -- for 2010 -- only to reappear in 2011, and it has been a sore spot to family business owners since its inception. Research shows that these concerns are legitimate -- and, if anything, understated. Faced with the sunset provision, the White House would like to lock in the current tax rate permanently -- 45% of total assets over $3.5 million at the time of death.

Everybody's familiar with Ben Franklin's old saw about nothing being certain but death and taxes. But how about the "death tax"? That's the loaded term employed by opponents of the estate tax, which has been part of the federal tax code for more than 90 years and the subject of furious repeal campaigns for almost that long.

YOU probably know that owning real estate is one of the best ways to shelter your income from taxation. But beyond that, how much do you really understand about your property's tax basis, deductions and depreciation? If the answer is, "Just enough to know I should let my accountant handle it," you may be making a costly mistake, writes Sandy Botkin in "Real Estate Tax Secrets of the Rich."