McDermott's "Sensible Estate Tax Act of 2011"

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 McDermott Bill:

“Making the Estate Tax
Fair and Equitable Again”

For Immediate Release: November 17, 2011

WASHINGTON, DC
 – Today, Congressman Jim McDermott (D-WA), a senior member of the House Ways and Means Committee, introduced the “Sensible Estate Tax Act of 2011” to restore fairness to the estate tax. It is the first estate tax reform bill introduced by a member of the tax-writing committee that does not simply extend or repeal the existing estate tax law.

 

The McDermott bill would bring the estate tax rates back to the pre-2001 levels, levels that worked and helped drive growth for all Americans, with a maximum marginal rate of 55% and a $1 million exemption ($2 million for married couples) – both would be indexed for inflation beginning in 2000. Current law allows for a $5 million exemption at a maximum rate of 35%, which allows over 99% of estates to pass tax-free.

 

“The U.S. economy and the American people are struggling through one of the worst recessions in our history,” said Congressman McDermott. “Now is the time to ensure our tax policy is fair and equitable for all Americans, and the estate tax bill that I am introducing today embodies these values.”

 

In addition to the changes to fairer rates, the legislation also includes a number of critical reforms and provisions that would close estate tax loopholes. In summary, the legislation would do the following:

 

·         Reunify and make permanent the portability for spouses of the gift and estate tax exclusions;

 

·         Restore the credit for state transfer taxes paid;

 

·         Close loopholes in the asset valuation and minority discount rules;

 

·         Provide for consistent basis reporting between estates and beneficiaries;

 

·         Require a minimum 10-year period for grantor retained annuity trusts; and,

 

·         Provide meaningful limits to the generation skipping transfer tax exemption.

 

McDermott added,“This legislation will take us back to an estate tax that worked during one of America’s most prolonged periods of economic prosperity. It provides the kind of certainty that practitioners and taxpayers have been calling for since the Bush tax cuts took effect. Never in our history has an exemption increased over 500% in less than a decade and known loopholes been left open for abuse. The estate tax is broken, and it’s time we fix it.”

 

Many prominent wealthy Americans have expressed their support of an estate tax. Among them is Bill Gates, Sr. who said, “I welcome the introduction of this legislation, and I commend Congressman McDermott on his leadership in continuing the conversation for a fair and equitable estate tax. I have long believed that individual wealth is only possible through the significant investment America makes in the lives of its citizens. An estate tax ensures that those who have benefited the most from this great country reinvest in the very promise of wealth and opportunity America provided them.”

 

Responsible Wealth member and former investment banker Eric Schoenberg said, “As a patriotic American who will be subject to the estate tax, I wholeheartedly support Congressman McDermott’s proposed bill to return estate tax rates to those that existed through 2000. Given the obvious need for significant steps to get the United States’ fiscal house in order, I think it is perfectly reasonable to ask the wealthiest Americans to be the first to sacrifice, and particularly fitting that we should contribute to the public welfare at the same time that we are contributing to the private welfare of our heirs.”

 

The legislation is endorsed by United for a Fair Economy, Responsible Wealth, and others pending list formation.