News & Events
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July 2010
The Latest Estate Tax Proposal
by Jack S. Johal
Stating "IT'S TIME FOR MULTI-MILLIONAIRES AND BILLIONAIRES TO PAY THEIR FAIR SHARE", and that "for the first time since 1916, the heirs to multi-million and billion dollar fortunes are able to receive their entire inheritance free of federal estate taxes, costing at least $14.8 billion in lost revenue in 2010 alone", Senators Bernard Sanders, Tom Harkin, and Sheldon Whitehouse asked their colleagues to join them in becoming an original co-sponsor of the Responsible Estate Tax Act. Their proposal would:
- Exempt the first $3.5 million of an estate from federal estate taxation ($7 million for couples). (According to their estimates, this would exempt 99.75% of all estates from the federal estate tax in 2011).
- Include a progressive rate structure so that the superwealthy pay more:
- The rate on the value of the estate above $3.5 million and below $10 million would be 45%, the same as the 2009 level.
- The rate on the value of estates above $10 million and below $50 million would be 50%.
- The rate on the value of estates above $50 million would be 55%.
- 10 Percent Billionaire's Surtax: The proposal would impose a 10% surtax on the value of an estate above $500 million ($1 billion for couples).
- Close Estate and Gift Tax "Loopholes" requested in President Obama's Fiscal Year 2011 budget.
- Require consistent valuation for transfer and income tax purposes;
- Modify rules on valuation discounts;
- Require a 10-year minimum term for Grantor Retained Annuity Trusts (GRATS).
- Protect family farmers by allowing them to lower the value of their farmland by up to $3 million for estate tax purposes.
Their bill would increase the ability of an estate to use the Special Use Valuation rule reducing the value of farmland for estate tax valuation purposes from its current $1 million to $3 million and index it for inflation.
Benefit farmers and other landowners by providing federal estate tax relief for conservation easements. Their bill would provide tax relief to farmers and other landowners by amending federal estate tax rules for conservation easements through an increase in the maximum exclusion amount to $2 million and increasing the base percentage to 60%.
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