DATE: March, 2001

DAILY HEADLINE NEWS FEED | ARCHIVES OF PAST MONTHS

Pension Enhancements

While popular with Congress and the public, increases in retirement savings limits are not a part of the Bush administration's tax bill. According to Investment News, "the White House is throwing cold water on the notion that the president would back passage of pension legislation this year." Financial e-news 2/15/01

President Bush Promotes Tax Cut
President Bush traveled to Capital Hill this week to promote his $1.6 trillion tax cut. President Bush stated to Congress that Americans should, "spend their own money to meet their own needs, to fund their own priorities and pay down their own debt."

However, President Bush is expected to ease up on his plan to kill the estate tax after foes of the move said it could hurt charitable, insurance and other interests, The Wall Street Journal reported Feb. 20. The death tax now is expected to be reduced significantly, the Journal said, although large estates still would face some taxes. Opponents of repeal got a big boost last week when financier George Soros, investor Warren Buffett and the father of Microsoft chief Bill Gates teamed up with other wealth Americans to say repeal could hurt charitable giving that supports services for the poor.

The "Big Five" of the Bush plan are (i) income tax rate cuts, (ii) marriage penalty relief (iii) doubling the $500 child credit, (iv) a non-itemized charitable deduction and, (v) repeal of the estate tax.

Presidential Press Secretary R. E. Fleisher claimed that President Bush will hold firm on the repeal of the estate tax. Mr. Fleisher noted, "He thinks that the death tax is wrong; he thinks it is not good policy to make the people visit the IRS and the undertaker on the same day, and he is going to fight to repeal that tax."

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Who Pays the Estate Tax?
Based on Treasury revenue figures, it is possible to estimate the total revenue for the estate tax. The approximate estimates are as follows:

Year	Revenue
1990	$10 billion
1995	$15 billion
2000	$26 billion
2005	$40 billion

What is of perhaps more interest to tax payers is the share of revenue paid by individuals at various estate sizes. This is significant, because the very real possibility is that there will be estate reform with an increase in the estate exemption equivalent. The question taxpayers will ask is - will this increased exemption be enough to exclude my estate from taxes? The revenue estimates for the year 2000 are listed below.

Estate Size	# Of Returns	Total Tax
600 - 1M	20,106	1B
1M - 2,5M	19,846	5B
2.5M - 5M	4,633	4B
5M - 10M	1,836	3B
10M - 20M	688	3B
20M +	374	3B

For example, raising the exemption to $1 million would exclude approximately 40% of all taxable estates from the tax. Raising the exemption to $2.5 million per person in year 2000 numbers would exclude approximately 80% of all of the current taxable estates from tax.
From GiftLaw, a Crescendo service

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Bush backing could boost transfers from retirement plans.
By Todd Cohen
Efforts to increase the tax deduction for retirees who take money from their retirement plans to make charitable contributions are being closely watched by backers who hope support by President Bush will translate into congressional approval for the change.

The proposed change, which supporters believe could prompt a surge in charitable giving, is favored by the tax-writing committees in Congress but has failed to win approval in each of the past two sessions.

Backers include a loose coalition representing higher education, community foundations, health care, charities and the planned giving community.

Current tax rules, which limit itemized deductions, require retirees to treat as taxable income any funds they withdraw from a retirement plan and contribute to charity. Current rules also give no deduction to non-itemizing retirees -- whose only source for making charitable contributions may be their retirement plan.

The proposed change, which would increase to 70½ years from 59½ years the minimum age of eligible taxpayers, would give retirees in both cases the equivalent of a full charitable deduction. Under the proposal, funds taken from a retirement plan and donated to charity would not be considered income for tax purposes. And non-itemizers could instruct their retirement plans to write checks to charities directly from their accounts, thus avoiding having to report it on their tax returns.

While no estimates are available on the level of contributions that the change might generate, said Matt Hamill, senior associate at the Institute for Higher Education Policy in Washington, DC, "it seems that current law is prohibiting a fairly significant amount of charitable giving."

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Bush talks charity - Incentives for giving
President asks Congress to embrace nonprofit groups. President Bush on Tuesday asked Congress to enact measures to boost charitable giving and the work of charitable groups.

In a nationally televised, the President said allowing taxpayers to deduct donations, whether or not they itemize their returns, could trigger up to $14 billion a year in new charitable giving. And he said his budget, to be released today, calls for investing more than $700 million over the next 10 years in a Federal Compassion Capital Fund to provide a mentor to the more than one million youngsters with a parent in prison, and to boost other local efforts to fight illiteracy, teen pregnancy, drug addiction and other social problems.

“These groups are working in every neighborhood in America, to fight homelessness and addiction and domestic violence, to provide a hot meal or a mentor or a safe haven for our children,” President Bush told lawmakers. “Government should welcome these groups to apply for funds, not discriminate against them.”
nonprofitxpess.com 3/5/2001