Currently, estates valued at less than $675,000 are exempt from the estate tax. That is scheduled to rise to $4 million by 2010. This would have an effect on 2% of the income tax payers. This increase in the exemption would be good for 80 to 90% of those who would otherwise be taxed. According to available figures that are two years old, that would mean about 3,000 households would be effected.

The bill also states that stocks or real estate inherited at the time of death would be valued at the current market, not what the deceased paid for the properties. That would mean no capital gains through 2010, and no estate tax either.

In 2011, the estate tax would be repealed. At that point though, the capital gains tax will kick in on anything with a value of $1.3 million or more.

Expect more folks to want to keep the $4 million ceiling and the no capital gains, as opposed to the total repeal. Even the experts don't like the way this reads.

The real rub is what the Federal Government would do to the states. Under current plans, estate taxes are shared with states. Initially the credit would be cut in half and then eliminated completely in 2005. Washington will continue to collect revenue from estate taxes, but the states would no longer be eligible. If the states haven't figured it out yet, it could mean $50 billion to $100 billion less in revenue. currently, there are 35 states that do not have an estate tax.