Repel the Bush Tax Cuts - Estate Tax
July 28th 2010 21:07
We have been hearing a great deal about the repealing or expiring of what are known as the Bush Tax Cuts unless Congress acts, the estate tax will be back next year and no more than $1 million of a person's estate would be exempt from it. That's well below the $3.5 million exemption in place last year. And the top estate tax rate would be 55%, up from 45% in effect last year. Well here is the URL that George W Bush signed into law. Really Long Link
Let’s say that many of the tax relief efforts given in this law will expire meaning that the no new taxes on the middle class could be out the window. Meaning you need to read the law of what tax relief efforts that could go away and do not let anyone in the administration divert your attention away from that fact however, the one that is pressing is the estate tax.
As the tax is written in the law,
Year Highest Estate and
Gift Tax Rate Amount Exempt
from Estate Tax
2002 50% $1 million
2003 49% $1 million
2004 48% $1.5 million
2005 47% $1.5 million
2006 46% $2 million
2007 45% $2 million
2008 45% $2 million
2009 45% $3.5 million
2010 Top Individual Rate
(for gift tax only) Unlimited - Taxes Repealed
According to State Farm Life and Annuities web page (URL in References) it’s very important to be aware that this repeal is temporary; the entire law "sunsets" (expires) after December 31, 2010. This means that the provisions of this 2001 Tax Act will no longer be effective on January 1, 2011 and the tax structure as it existed in 2001 will take effect again (in 2011, Federal estate tax will be assessed on property in excess of $1 million with a maximum tax rate of 55%.) Remember property is not just a house or real estate. Property is anything and everything your parents owed, savings, checking, IRA’s, painting, antiques, cars, investments, and IRA’s (I am sure I am leaving something out but you get the idea the 1 million dollars adds up very quickly So after you pay to have everything transferred into your name then you have it assessed or appraised then you will be taxed. The house that you parents own they probably paid several thousand dollars for (depending on the age of your parents) so today the value is higher. Have there been changes or upgrades that make it worth more. So what is the total of the dollar value of everything your parents have and not they are not rich but after having lived through the depression and rationing they saved every nickel, penny and dime. What I am saying is that it would not take much to accumulate a million dollars in property, assets, savings and insurance.
Just reading the law one understands that there are a great deal of loophole. The vagueness of this law should get you to realize that no one is exempt and that anyone could be affected by being taxed and with the way this Congress is spending money someone’s going to have to pay for it, and that would be you and me.
Timothy Geitner stated that he felt the rich (a term not defined in dollars and cents) should have to pay the “death tax” and Congressman Crowley of Wisconsin said “CROWLEY: I could tell you, Chris, in my district, there are very few people who make more than that money (INAUDIBLE) just a gross income of $250,000 or more. And I think, to live in the greatest country, as I said before, the world has ever known, it`s a small price to pay” (Hardball July 27, 2010). This country is built on desire, will, determination and I must say we have had some of the greatest inventive minds that allowed many to become wealthy. So why can’t we keep what we earn. Many who are wealthy are very benevolent. Just look at Bill Gates, Jimmy Buffet, Gene Simmons, and Sam Walton just to name a few. This will stop if they are overly taxed (I know cause many of us have cut back our donations because of an uncertain economy) and if they put money back into their businesses to hire new people, to provide additional benefits, to provide raises or bonuses.
Also let’s think about how many programs congress has decided to levy a tax on the wealthiest people. If they keep taxing the wealthiest then they will not be wealthy for very long and then what is the government going to do? In fact Forbes Magazine in September 2009, Matthew Miller and Duncan Greenberg wrote “The Richest People in America says that “America's super rich are getting poorer. For only the fifth time since 1982, the collective net worth of The Forbes 400, our annual tally of the nation's richest people, has declined, falling $300 billion in the past 12 months from $1.57 trillion to $1.27 trillion.”
I write this because Blanche Lincoln (Democrat from Arkansas) and Jon Kyl (Republican from Arizona) are introducing the “Estate Tax Reform which is to permanently reform the federal estate tax. This proposal is modifying language of H.R. 5297. Really Long Link
Here is a summary about the proposal since I have yet to find a bill or actual text.The proposal would require the Senate Finance Committee to amend H.R. 5297, the Small Business Lending bill, to permanently set the estate tax rate at 35 percent, with a $5 million exemption amount phased in over 10 years and indexed for inflation. It would also provide a “stepped up basis” for inherited assets.
“It’s time to take decisive action on the estate tax, and provide the permanent solution that Arkansas’s hardworking farmers and small businesses are desperately seeking,” said Lincoln. “Uncertainty in the estate tax law has caused incredible difficulties for these individuals, which is why I have fought for a quick resolution to the issue that is both permanent and fair. One way to improve upon an already strong legislative initiative that includes tax incentives and a number of other benefits for small businesses is to ensure that we reach a permanent solution on the estate tax to provide small business owners and famers with the certainty they need.”
“If the Small Business Lending bill is intended to help small business create jobs, wouldn’t it make sense to provide small business owners with the certainty that their tax rates aren’t going to skyrocket at the beginning of next year?” said Kyl. “In just six short months, American taxpayers will face the largest tax hike in history unless Congress acts. It is estimated that more than a half million American families will pay the estate tax over the next decade, and the lack of congressional action creates a tremendous amount of uncertainty for these families, small-business owners, and farmers. This uncertainty is one of several factors acting to prevent a strong economic recovery from taking hold.”
The Lincoln-Kyl proposal provides an election for deceased taxpayers to either retain this year’s estate tax rate, which is zero percent with “carry over basis,” or file under the provisions of the new bill.
Their proposal also instructs the Senate Finance Committee to offset the difference in revenue loss between the Obama administration’s proposed 45 percent estate tax rate with a $3.5 million exemption amount and their proposed reform.
If Congress does not act this year, the federal estate tax is scheduled to increase to 55 percent with only a $1 million exemption at the beginning of 2011.
Senators Lincoln and Kyl introduced a similar measure in April 2009 that received broad bipartisan support and was successfully added to the non-binding congressional budget resolution
References:
Really Long Link
www.statefarm.com
Really Long Link
Really Long Link
Really Long Link
Let’s say that many of the tax relief efforts given in this law will expire meaning that the no new taxes on the middle class could be out the window. Meaning you need to read the law of what tax relief efforts that could go away and do not let anyone in the administration divert your attention away from that fact however, the one that is pressing is the estate tax.
Year Highest Estate and
Gift Tax Rate Amount Exempt
from Estate Tax
2002 50% $1 million
2003 49% $1 million
2004 48% $1.5 million
2005 47% $1.5 million
2006 46% $2 million
2007 45% $2 million
2008 45% $2 million
2009 45% $3.5 million
2010 Top Individual Rate
(for gift tax only) Unlimited - Taxes Repealed
According to State Farm Life and Annuities web page (URL in References) it’s very important to be aware that this repeal is temporary; the entire law "sunsets" (expires) after December 31, 2010. This means that the provisions of this 2001 Tax Act will no longer be effective on January 1, 2011 and the tax structure as it existed in 2001 will take effect again (in 2011, Federal estate tax will be assessed on property in excess of $1 million with a maximum tax rate of 55%.) Remember property is not just a house or real estate. Property is anything and everything your parents owed, savings, checking, IRA’s, painting, antiques, cars, investments, and IRA’s (I am sure I am leaving something out but you get the idea the 1 million dollars adds up very quickly So after you pay to have everything transferred into your name then you have it assessed or appraised then you will be taxed. The house that you parents own they probably paid several thousand dollars for (depending on the age of your parents) so today the value is higher. Have there been changes or upgrades that make it worth more. So what is the total of the dollar value of everything your parents have and not they are not rich but after having lived through the depression and rationing they saved every nickel, penny and dime. What I am saying is that it would not take much to accumulate a million dollars in property, assets, savings and insurance.
Timothy Geitner stated that he felt the rich (a term not defined in dollars and cents) should have to pay the “death tax” and Congressman Crowley of Wisconsin said “CROWLEY: I could tell you, Chris, in my district, there are very few people who make more than that money (INAUDIBLE) just a gross income of $250,000 or more. And I think, to live in the greatest country, as I said before, the world has ever known, it`s a small price to pay” (Hardball July 27, 2010). This country is built on desire, will, determination and I must say we have had some of the greatest inventive minds that allowed many to become wealthy. So why can’t we keep what we earn. Many who are wealthy are very benevolent. Just look at Bill Gates, Jimmy Buffet, Gene Simmons, and Sam Walton just to name a few. This will stop if they are overly taxed (I know cause many of us have cut back our donations because of an uncertain economy) and if they put money back into their businesses to hire new people, to provide additional benefits, to provide raises or bonuses.
Also let’s think about how many programs congress has decided to levy a tax on the wealthiest people. If they keep taxing the wealthiest then they will not be wealthy for very long and then what is the government going to do? In fact Forbes Magazine in September 2009, Matthew Miller and Duncan Greenberg wrote “The Richest People in America says that “America's super rich are getting poorer. For only the fifth time since 1982, the collective net worth of The Forbes 400, our annual tally of the nation's richest people, has declined, falling $300 billion in the past 12 months from $1.57 trillion to $1.27 trillion.”
I write this because Blanche Lincoln (Democrat from Arkansas) and Jon Kyl (Republican from Arizona) are introducing the “Estate Tax Reform which is to permanently reform the federal estate tax. This proposal is modifying language of H.R. 5297. Really Long Link
Here is a summary about the proposal since I have yet to find a bill or actual text.The proposal would require the Senate Finance Committee to amend H.R. 5297, the Small Business Lending bill, to permanently set the estate tax rate at 35 percent, with a $5 million exemption amount phased in over 10 years and indexed for inflation. It would also provide a “stepped up basis” for inherited assets.
“It’s time to take decisive action on the estate tax, and provide the permanent solution that Arkansas’s hardworking farmers and small businesses are desperately seeking,” said Lincoln. “Uncertainty in the estate tax law has caused incredible difficulties for these individuals, which is why I have fought for a quick resolution to the issue that is both permanent and fair. One way to improve upon an already strong legislative initiative that includes tax incentives and a number of other benefits for small businesses is to ensure that we reach a permanent solution on the estate tax to provide small business owners and famers with the certainty they need.”
“If the Small Business Lending bill is intended to help small business create jobs, wouldn’t it make sense to provide small business owners with the certainty that their tax rates aren’t going to skyrocket at the beginning of next year?” said Kyl. “In just six short months, American taxpayers will face the largest tax hike in history unless Congress acts. It is estimated that more than a half million American families will pay the estate tax over the next decade, and the lack of congressional action creates a tremendous amount of uncertainty for these families, small-business owners, and farmers. This uncertainty is one of several factors acting to prevent a strong economic recovery from taking hold.”
The Lincoln-Kyl proposal provides an election for deceased taxpayers to either retain this year’s estate tax rate, which is zero percent with “carry over basis,” or file under the provisions of the new bill.
Their proposal also instructs the Senate Finance Committee to offset the difference in revenue loss between the Obama administration’s proposed 45 percent estate tax rate with a $3.5 million exemption amount and their proposed reform.
If Congress does not act this year, the federal estate tax is scheduled to increase to 55 percent with only a $1 million exemption at the beginning of 2011.
Senators Lincoln and Kyl introduced a similar measure in April 2009 that received broad bipartisan support and was successfully added to the non-binding congressional budget resolution
References:
Really Long Link
www.statefarm.com
Really Long Link
Really Long Link
Really Long Link
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