Dan Duncan died on March 28, 2010 and, because of the inaction of the Congress, the possibility of collecting over $4 billion in taxes was lost.
Mr. Duncan was a 77 year-old oilfield businessman, who was ranked by Forbes as the 74th richest person in the world. His estate is estimated to be $9.8 billion.
In 2009, there was a federal estate tax on estates in excess of $3.5 million. The estate tax rate was 45%. The estate tax was scheduled to expire on December 31, 2009, though very few commentators thought that Congress would let that happen. In early December 2009, the U.S. House of Representatives passed a bill which would have extended the estate tax for another year. However, the Senate was wrapped up in the arguments regarding health care reform and never passed the estate tax extension.
The estate tax was a significant source of revenue, even though it only applied to a very few wealthy individuals. After the start of the 2010, it was thought that Congress would address the loss of the estate tax, and would pass a new tax, similar to the old tax, which would be retroactive to January 1, 2010. Although there were possible constitutional challenges to the retroactive estate tax, many commentators thought that it could pass a court challenge.
But things have changed. If we assume that Mr. Duncan’s estate would be taxed at a 45% rate, the resulting estate tax would be over $4.4 billion (although Mr. Duncan could easily afford the best tax advice available and reduce his tax bill). Because Congress allowed the estate tax to die for 2010, no estate tax will be due from Dan Duncan’s estate and the U.S. Treasury may be poorer by billions of dollars.
With the vast amount of money at stake, it seems like the Mr. Duncan’s estate would vigorously fight the application of a retroactive estate tax.
How many more billionaires will die before Congress acts to reinstate the estate tax? How much more will be lost in estate taxes?