| Federal
3/28/07
US Senate Considers Major Reduction in Estate Tax.
The US Senate is expected to consider two proposals to
significantly cut Estate taxes. The Kyle amendment, would raise
the Federal Estate Tax exemption level to $5 million ($10
million per couple) and lower the estate-tax rate to 35 percent.
Senator Conrad’s alternative Amendment would make similar
changes to the estate tax but offset its cost.
On Wednesday, March 21, the Senate adopted the Baucus
amendment to make permanent the 2009 estate-tax law. Under
Baucus’ plan, the Federal Estate Tax exemption level would rise
to $3.5 million ($7 million per couple). Everything above that
level would be taxed at a 45% tax rate. Under the 2009 law only
three in 1,000 estates would owe any estate tax. Decreasing
estate taxes beyond the already low level of the 2009 law would
add billions of dollars to the federal budget deficit for the
sake of tax cuts to the very wealthy.
Estate tax is a major engine for charitable giving through
estate planning. The elimination of estate tax (or a reduction
of this proposed magnitude) could have profound and long-range
implications for estate planning, Philanthropies, charitable
giving, and the pool of available resources directed to improve
the quality of life for Americas less fortunate. For background
on estate tax reform go to
http://www.ombwatch.org/article/archive/93. For
selected data on estate taxes by the Joint Tax Committee go to
page 30 of the Joint Tax Committee’s Report JCX-11-07
http://www.house.gov/jct/x-11-07.pdf.
8/4/06
Estate Tax Reform / Minimum Wage “Trifecta” Bill
Fails in Senate. The prior pension Bill HR 2830 included
certain tax extenders provisions. Conference Committee
negotiations collapsed Thursday evening July 27, over a number
of issues including the tax extenders provisions. On Friday July
28, Bill Thomas (R-CA), Chairman of the House Ways and Means
Committee ended this stalemate by putting forth a new bill H.R.
4 without the extenders. Instead, these extenders provisions
were inserted into the estate tax / minimum wage bill to create
the “trifecta” bill H.R. 5970.
On August 3, before considering the much anticipated pension
reform bill, the Senate failed to muster the 60 votes needed to
take-up the estate tax reform bill by only 4 votes. By failing
to pass the cloture vote (which would have limited debate on the
trifecta bill), H.R. 5970 did not make it to the Senate floor
for consideration. The Senate is in recess until after Labor
Day. The House recessed last Friday, July 28. It is unlikely
that H.R. 5970 will be considered during the 15 session days
after Labor Day. While the estate tax reform may be nearly (75%)
as costly to the US treasury as complete repeal, a number of the
tax extender provisions may be favorable to charities.
For more information and a copy of the bill go to
http://capwiz.com/pano/issues/bills/?bill=8945126.
State
State House Considers Bill to Abolish Death Tax.
On November 28, 2005, a new bill was introduced in the State House of
Representatives to phase out the state's inheritance tax over
the next three years. The existing tax rate would steadily
decrease until reaching zero as of 2009. This bill was proposed
in the House and referred to the House Finance Committee on the
same day. Related bills include HB 2204 (referred to Finance
11/04/05) and HB 607 (Referred to Finance 2/16/05).
Historically, estate taxes are considered to be an important
engine for planned charitable giving. It is uncertain how much
impact a tax reduction will have on the charitable community.
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