Au Revoir: The Year In Review 2013
By Robert L. Moshman
We entered 2013 in free fall, having plunged over the fiscal cliff. Thus, we began the January issue of this newsletter with a resolution for 2013: “Never invite Congress to a New Year’s Eve party again. They fight all night, they won’t go home, and what a mess they leave behind!”
After a 20-hour marathon of debate, Congress adopted the American Taxpayer Relief Act of 2012 (ATRA). The good news was that the transfer tax system was stabilized with a unified estate and gift tax, a stepped-up tax basis for assets owned at death, and a significant lifetime exemption. The bad news was that a higher top tax rate and capital gains tax rate under ATRA, combined with the 3.8% Medicare surtax from the Patient Protection and Affordable Health Care Act, resulted in excessively high tax rates on some relatively small personal trusts.
The Congressional dysfunction of 2013 then manifested itself with a complete shutdown of government when terms of raising the national debt ceiling were disputed. Then came the rollout of healthcare.gov to implement the Affordable
Health Care Act, and the chaos and fallout from that will accompany us into the new year. One brighter note is that Congress achieved a bipartisan agreement to avoid the next budget crisis. The negative ramifications from this, however, are that deficit spending and the servicing of the national debt are not sustainable. Barring substantive reforms, an economic day of reckoning must follow.
