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What
is Your Arizona Congressman Doing About the Estate Tax?
By Kenneth Barney
Rowley, Chapman, Barney & Buntrock, Ltd.
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Ever since President
Bush signed The Economic Growth and Tax Relief Reconciliation Act
of 2001 (EGTRRA), which immediately increased the value of assets
a decedent could pass at death from $675,000 to a full escalation
of $3.5 million in 2009, in addition to calling for a complete repeal
in 2010, Congress has been clamoring to further change the estate
tax laws.
During the past 6 years, there have been many bills submitted to Congress
attempting to further change the estate tax laws. Change is necessary
due to the grave mistake of allowing the benefits of EGTRRA to sunset
in 2011, bringing the amount a property a decedent can pass at death
back down to $1 million dollars.
The EGTRRA sunset provision will adversely affect America’s middle
class families who had modest means during life, but may have left
behind a retirement plan, 401K plan, equity in a home or rental property,
insurance death benefits or even a small business that pushes their
net worth to over $1 million at death.
The latest attempt to fix and reform the estate tax laws comes from
freshman Arizona U.S. Representative, Harry Mitchell. Democrat Congressman
Mitchell and Republican Congressman Christopher Shays from Connecticut,
have introduced a bipartisan bill, called The Capital Gains and Estate
Tax Relief Act of 2007 (Act), H.R. 3170.
First, the Act would permanently reduce the capital gains rate to
15 percent. Without this change the capital gains rate would increase
back to 20 percent in 2011.
Secondly, the Act would permanently reduce estate taxes by increasing
the Unified Credit (which affects the amount of property a citizen
can pass at death without having to pay estate taxes)
.
The Unified Credit amount would be increased (from $2.0 Million in
2007) to a full $5 million, as follows:
•
$3.75 million in 2010
• $4 million in 2011
• $4.25 million in 2012
• $4.5 million in 2013
• $4.75 million in 2014
• $5 million 2015, increased for inflation is subsequent years
The estate tax
rates would be reduced from a maximum of 55 percent to 15 percent
for estates under $25 million and 30 percent for estates over $25
million. Additionally, the Act would increase the Unified Credit of
a surviving spouse with the amount of unused credit from a deceased
spouse.
These changes if accepted would substantially affect America’s
middle class families and prevent modest sized estates from working
families from having to pay estate taxes.
Congressman Mitchell’s office in Washington, D.C., recently informed
me that H.R. 3170 has been referred to the House Committee on Ways
and Means, but a hearing has not been set to review it. For more information
on this bill, please contact your Congressman.
Kenneth Barney is a partner with Rowley Chapman Barney & Buntrock, whose practice is limited to family based estate planning, tax planning, probate and trust administration and guardianship matters and can be reached at (480) 833-1113.
Kenneth C. Barney received his bachelor’s degree from Arizona State University in 1989 and his law degree from Arizona State University in 1999.
(480) 833-1113
www.azlegal.com
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