I came of age as a Royals fan, and I agree with George Brett’s comments at his Hall of Fame induction ceremony, “I don’t like those Yankees still”. George Steinbrenner’s Yankees tortured my beloved Royals in the late 1970s and early 1980s. I’ll never forget my dad flipping across news channels so my family could watch Brett tear out of the dugout over and over after umpires nullified his home run because Steinbrenner’s Yankees objected to the amount of pine tar on his bat. Ridiculous.

News reports suggest that the Senate may soon consider restoring the estate tax with an option allowing people to prepay their tax before they die. Details are apparently still in flux as senators negotiate. We—and maybe they–don’t know yet what they’ll propose for the basic estate tax but it’s unlikely to be harsher than the 2009 version.

If you’re single, not in great health, and are worth a lot but not a really huge lot, you could do your heirs a favor and die today or tomorrow. Sure, you may want to hang around to ring in the New Year but that could cost the beneficiaries of your will a chunk of change.

Let’s face it, from a tax policy perspective, 2009 was a bust. Except for creating a bunch of new credits in the name of economic stimulus, Washington pretty much ignored the revenue code. 2010 will be very different. Facing trillions of dollars of expiring Bush-era tax cuts, President Obama and Congress will be forced to make some critical decisions in the new year.

Thanks to Senate gridlock, taxpayers engaged in estate planning will suffer whiplash over coming months as the federal estate tax disappears and reappears, possibly unexpectedly and retroactively.
When the Senate refused to act Wednesday, it opened the door for the estate tax to disappear in two weeks–although no one knows for how long. Not only will the tax end, but the gift tax rate will fall to 35 percent. And, hardly noticed by most, only some assets inherited in 2010 will get “step-up” in basis.

It is almost 2010, and Congress is scrambling to figure out what it is going to do about the estate tax.
In some perverse way, it’s fun to watch lawmakers dive into a mess largely of their own making. But as you do, don’t be distracted by the argument over the size of estates that should be excluded from tax, or whether the rules are extended for one year or two. The real argument is over the rate. That’s where the bucks are.

The estate tax is only a faint shadow of its former self. In 2009, less than one-quarter of one percent of deaths—just 5,500 decedents—will leave taxable estates, the smallest percentage since at least the Great Depression. In part, that tiny fraction reflects the current recession’s devastation of assets—the Fed estimates that the total value of household and nonprofit assets fell by about one-sixth between 2007 and the first quarter of 2009. But changes in estate tax rules over the past decade have played a much larger role than economic swings.

I’ve been struggling to understand the overheated rhetoric surrounding the proposal that allows Medicare to pay for end-of-life counseling. I think I get it now: It is all about the death tax.
Here is the story the government doesn’t want you to know. The 2001 Bush tax cuts will repeal the estate tax next year, but only for a year. Starting in less than 18 months, estates in excess of $1 million will once again be taxed at a stiff 55 percent. This will cost the children of the very wealthy tens of billions of not-so-hard-earned dollars. And it creates a huge incentive for these offspring to, shall we say, accelerate nature’s course. You see where I'm going here.

President Obama wants to maintain the 2009 rules on the estate tax—in effect allowing couples with assets of as much as $7 million to pass on their wealth tax free. Amazingly, this has some critics of the levy railing about confiscatory taxes. Art Laffer even argued in this morning’s Wall Street Journal that Obama's estate tax plan would short-circuit an economic recovery.

There may be no provision in tax law more bizarre than the estate tax. In just a year and a few days, on Jan. 1, 2010, the levy will expire and estates of any size will be passed on tax-free. A year after that, the tax will return with a vengeance. Uncle Sam will take 55 percent of assets of more than $1 million.