Paul Krugman, "Throwing Momma From the Train"

"Throwing Momma From the Train"

by Paul Krugman

"I warned you, back in 2001! So in the law as now written, heirs to great wealth face the following situation: If your ailing mother passes away on Dec. 30, 2010, you inherit her estate tax-free. But if she makes it to Jan. 1, 2011, half the estate will be taxed away. That creates some interesting incentives. Maybe they should have called it the 'Throw Momma From the Train Act of 2001.'

And it’s happening: At the beginning of 2010, the Bush estate tax plan is scheduled to change such that all estates, up to any value, are excluded. Because the tax bill was passed through reconciliation, however, it has a ten-year time frame, meaning that the law expires at the end of 2010. And that means that the heirs of fortunes received in 2010 will pay no tax, while heirs getting theirs in 2011 will pay 50% of the value of the estate to the Internal Revenue Service.

Perhaps you notice the uncomfortable incentive structure here."

- http://krugman.blogs.nytimes.com/

A whole lot of "accidents" are going to happen to older rich folks in 2010...