DATE: July, 2003
The following is intended as general information and does not represent legal or tax advice. Individual circumstances vary - please consult your legal and tax advisors about your specific situation. As a monthly news source, some information may be remain on this page for several weeks.
| "Over and over again, the courts have said there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich and poor, and all do right, for nobody owes any duty to pay more tax than the law demands. Taxes are enforced exaction's, not voluntary contributions." Judge Learned Hand |
NEWS SOURCES | ARCHIVES OF PAST MONTHS
Following passage of the vigorously debated H.R. 8 on June 18th, which would cancel the estate tax repeal sunset provision in the Economic Growth and Tax Relief Reconciliation Act of 2001, four separate fallback bills have been introduced dealing with the estate tax. Three maintain the tax while increasing exclusion amounts and the fourth reinstates the tax to its pre-EGTRRA levels.
H.R. 2477 (Ford Jr., D-Tenn.) would increase the exclusion equivalent of the unified credit to $7.5 million and would modify the estate tax rate schedule. The bill would also repeal estate and gift tax provisions made by the Economic Growth and Tax Relief Reconciliation Act of 2001.
H.R. 2480 (Leach, R-Iowa) would reduce the estate and gift tax rates to 30 percent, increase the unified credit exclusion equivalent to $10 million, and increase the annual gift tax exclusion to $50,000. The unified credit exclusion would be inflation adjusted and would come with a cost of living adjustment.
H.R. 2502(Bereuter, R-Neb) would reduce estate tax rates, increase the exclusion equivalent of the unified credit to $10 million, and adjust the unified credit for future inflation. Bereuter's proposal would also repeal the estate tax benefit for family-owned business interests.
H.R.
2481 (Lowey, D-N.Y) would reduce estate tax rates by 20 percent, increase the
unified credit equivalent exclusion for estate and gift taxes to $2.5 million,
and adjust the unified credit for future inflation.
Taken from
Planned Giving Design Center 7/2/2003 News Alert
Bush Cites the Cost Of Tax-Cut Repeal
On 6/22, the Bush administration released a highly selective analysis of the cost to families of rolling back scheduled tax cuts, an early sign of the White House's plan to brand Democrats as tax raisers throughout their race for the presidential nomination.
In addition to using the issue to inject himself into the Democratic campaign, President Bush plans to make the extension and preservation of tax cuts a centerpiece of his general election campaign, senior Republican officials said.
The
seven-page analysis, by the Treasury Department's Office of Tax Analysis, asserts
that repealing the tax cuts enacted in 2001 and last month would mean a tax hike
of $1,933 for a married couple with two children and an income of $40,000. Their
taxes would go from $45 to $1,978, for an increase of 4,296 percent, the study
said.
Mike
Allen Washington Post Staff Writer
House and Senate Pass Medicare Drug Benefit
After a strong push from President Bush, the House (voting 216-215) and Senate (voting 76-21) each passed a version of a prescription drug benefit for the Medicare program. The bill now moves to the Conference Committee, but it is expected to be quickly approved and sent to the President.
The bill represents both a great compromise and a fulfillment of campaign promises by both Republicans and Democrats. Dr. Bill Frist (R-TN), Majority Leader in the Senate, promised that the bill would be signed into law quickly.
Under the bill there will be prescription drug coverage, an opportunity for using private alternatives such as HMOs instead of Medicare, and the option of keeping any existing prescription drug coverage. Sen. Frist stated, "Since we have agreement in those three areas, we will be able to accomplish the goal of giving real health care security to seniors."
Both parties supported the prescription drug bill. A key to Democratic support was Sen. Ted Kennedy (D-MA). He rallied Democratic Senators by claiming that the level of drug coverage would be increased to higher levels in future years. However, Sen. Kennedy also stated that he would oppose the final bill if it includes any of the means testing provisions of the House version. On the Republican side, there will be a limited test of PPOs as an alternative to the Medicare government program.
Therefore, both parties can claim victory. The Democrats have the first major enhancement to Medicare in two decades, while the Republicans can test the possible private alternatives to Medicare. Both parties will use the new prescription drug benefit to seek support from seniors in the next elections.
The
prescription drug benefit will start in the year 2006 after the next major elections.
From
GiftLaw
Who Wins, and Who Is Skipped, in the May Tax Cut
MOST taxpayers will benefit from the $350 billion tax cut signed into law last month, but the effects will vary, with some people benefiting significantly and others not at all.
The law is heavily tilted toward higher-income taxpayers because they tend to have the most investments and because they get the biggest rate reductions: the top bracket drops to 35 percent this year from 38.6 percent last year, while rates in the two lowest brackets, 10 and 15 percent, are unchanged.
The change in the treatment of dividends is striking. Under prior law, a dollar of dividends was taxed as ordinary income. On tax returns for the year 2000, only 20 percent of returns with income of less than $75,000 showed any dividends. In contrast, 87 percent of returns with $200,000 or more in income reported dividends.
Traditional middle-income families with children will also see their taxes reduced because the child credit, which reduces taxes dollar for dollar, is being increased to $1,000 for each child from $600, and because the marriage penalty that had been built into the 15 percent bracket and the standard deduction on couples with two incomes is being eliminated this year and next.
The
people who will get little or no benefit are those in the 10 percent bracket,
those who have no children and those without investments.
JAN
M. ROSEN, NY Times 6/8/03
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Revised: August 4, 2003 15:49.