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Issue
Should Congress pass legislation to make the estate tax phase-out permanent?
Status
In May 2001, Congress passed the Economic Growth and Tax Relief Reconciliation
Act (EGTRRA). The bill contained a ten-year phase-out and repeal of the
estate and generation-skipping transfer taxes through 2010. Unfortunately,
the bill could only pass the Senate under special rules requiring a sunset
of all the provisions in the bill in December 2010. Therefore, if Congress
fails to pass legislation to make these cuts permanent before December
2010 everything passed in the reconciliation bill will expire, including
the death tax, and will be reinstated at their previous rates.
Repealing
the death tax has been a top priority for PIA since 1997. The success
of last year’s tax bill was bittersweet due to the 2010 sunset provision.
President Bush strongly supports the permanency of the tax reforms passed
last year and especially the death tax portions. Several bills have been
introduced to repeal all or portions of the sunset provisions. The House
passed a complete permanency bill, as well as separate bills to make the
estate tax provisions permanent among other provisions in EGTRRA. The
Senate only considered death tax permanency legislation, but the vote
failed 54 to 44. Sixty votes were needed to waive the budget point of
order and pass the bill.
| Phase-out
and Repeal of Estate and Generation-Skipping Transfer Taxes in the
Reconciliation Bill |
| Calendar
Year |
Unified
Credit Exemption |
Top
Estate & Gift Tax Rates |
| 2001 |
$675,000 |
55% |
| 2002 |
$1
million |
50% |
| 2003 |
$1
million |
49% |
| 2004 |
$1.5
million |
48% |
| 2005 |
$1.5
million |
47% |
| 2006 |
$2
million |
46% |
| 2007 |
$2
million |
45% |
| 2008 |
$2
million |
45% |
| 2009 |
$3.5
million |
45% |
| 2010 |
N/A
(Taxes Repealed) |
Top
individual rate under
the bill for gift tax only |
Concerns
Since the vast majority of PIA companies are small businesses and many
are family-owned, this issue continues to be of particular concern. With
the sunset provisions in the reconciliation bill, printers must continue
to engage in expensive and time consuming death tax planning to protect
their businesses from the threat of these debilitating taxes.
Position
PIA strongly supports the repeal of the death tax sunset provisions and
will continue to push for passage.
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