SENATE BILL: Responsible Estate Tax Act (At Final Vote)

[Southern Senator North Carolina Yankee]

SENATE BILL
To strengthen the estate tax and provide a bulwark against an oligarchy

Be it enacted in both Houses of Congress

Section 1; Title
1. This act may be cited as the "Responsible Estate Tax Act "
Section 2; Substance
1. The minimum value of estate subject to the estate tax shall be $3.5 million.
2. The estate tax brackets shall be adjusted as follows;
a) 45% tax shall be paid for the value of an estate between $3.5 million and $10 million.
b) 50% tax shall be paid for the value of an estate between $10 million and $50 million.
c) 55% tax shall be paid for the value of an estate in excess of $50 million.
3. A 10% surtax shall be imposed on the value of estates above $500 million.
4. The rules regarding grantor retained annuity trusts shall be expanded by-
a) The right to receive fixed amounts from an annuity shall last for a term of not less than 10 years and that such fixed amounts not decrease during the first 10 years of the annuity term.
b) The remainder interest shall have a value greater than 10% when transferred.
5. The generation-skipping transfer tax exemption is eliminated for any grantor trust that whose termination date is 50 years or less in duration.
6. The basic estate tax exclusion shall amount to $3.5 million.
7. The reduction in valuations of farmland for estate tax purposes shall increase to $3 million.
a) This reduction shall be adjusted to inflation after 2020.
8. The maximum estate tax exclusion for contributions of conservation easements shall increase to $2 million.
9. The annual gift tax exclusion shall be adjusted to limit the aggregate annual amount of such exclusion to twice the current exclusion amount for certain types of transfers, these being
a) A transfer in trust.
b) A transfer of an interest in a pass through entity.
c) A transfer of an interest subject to a prohibition on sale
d) Any other transfer of property that cannot be immediately liquidated by the donee.
10. Executors of estates and donors of gifts shall be required to file a gift tax return to disclose to the Department of the Treasury, and to recipients of any interest in an estate or a gift, information identifying the value of each interest received.
Section 3; Implementation
1. All changes in this legislation shall take effect in the first fiscal year following its passage into law.

People's Regional Senate

Sponsor: Devout Centrist
Senate Designation: SB19:18

[Devout Centrist]

This act would turn the current Estate Tax into a more progressive and fair tax on inheritance. This bill will result in a lower level of wealth inequality and generate considerable revenue for the Federal government. I encourage all of my colleagues to debate this bill and pass it as soon as possible.

[Southern Senator North Carolina Yankee]

How does this affect revenues and what is the expected impact on employment?

[Devout Centrist]

How does this affect revenues and what is the expected impact on employment?

It would bump the Estate tax from .6% of Federal revenue to about 1% of total Federal revenue. Revenue would likely increase from about $19 Billion a year to upwards of $35 Billion.

I would expect the impact on employment to be negligible. This bill would likely not effect many owners of sole proprietorships or partnerships, as the exclusion amount is equal to $3.5 million. Owners of S Corporations and LLC's will bear the brunt of the new estate tax, but this shouldn't impact their descendants ability to employ people.

[Mr. Reactionary]

Any tax rate exceeding 50% is evil.

[Former President tack50]

Do any regions have a regional estate tax? Otherwise you could end with a situation where the regional+federal state taxes add up to something ridiculous like 90%

[fhtagn]

Any tax rate exceeding 50% is evil.

Pretty much this.


Also worth noting that estate taxes can still often hurt middle class families under this bill. It is factually incorrect to operate under the assumption that this only targets the "rich", which is exactly the assumption most people who support jacking up the estate tax think.

[Fmr. Representative Encke]

This act would turn the current Estate Tax into a more progressive and fair tax on inheritance. This bill will result in a lower level of wealth inequality and generate considerable revenue for the Federal government. I encourage all of my colleagues to debate this bill and pass it as soon as possible.

I'll have a separate cost analysis ready shortly. Your numbers may not be correct in this context becasue the estate tax estimate from the FY2019 budget was 29 billion (due to changes from RL made last year).

[Devout Centrist]

This act would turn the current Estate Tax into a more progressive and fair tax on inheritance. This bill will result in a lower level of wealth inequality and generate considerable revenue for the Federal government. I encourage all of my colleagues to debate this bill and pass it as soon as possible.

I'll have a separate cost analysis ready shortly. Your numbers may not be correct in this context becasue the estate tax estimate from the FY2019 budget was 29 billion (due to changes from RL made last year).

Alright, thank you

[Devout Centrist]

Any tax rate exceeding 50% is evil.

Pretty much this.


Also worth noting that estate taxes can still often hurt middle class families under this bill. It is factually incorrect to operate under the assumption that this only targets the "rich", which is exactly the assumption most people who support jacking up the estate tax think.

The exemption, in this bill, is set at $3.5 million. The vast majority of middle class families do not have an estate anywhere near that value. That $3.5 million is also a per person exemption; for married couples, that would amount to $7.0 million.

Twenty years ago, the minimum estate subject to taxation was set at a million dollars. This bill is more than fair in its exemption.

[Mr. Reactionary]

Also remember, estates include the valuation of assets. If someone owns a business valued at $5 million dollars, thats no guarantee that the heirs have almost $2.5 million in cash just sitting around to pay all at once, especially if the valuation is largely driven by equipment and goodwill not how much discretionarycash on hand there is. Thats concerning too ... basically forces the sale of the business and maybe even their closure as the heirs may have to liquidate assets to pay the tax. If its pure cash assets that's one thing but high value non-cash assets are different.

[Devout Centrist]

Also remember, estates include the valuation of assets. If someone owns a business valued at $5 million dollars, that's no guarantee that the heirs have almost $2.5 million in cash just sitting around to pay all at once, especially if the valuation is largely driven by equipment and goodwill not how much discretionary cash on hand there is. That's concerning too ... basically forces the sale of the business and maybe even their closure as the heirs may have to liquidate assets to pay the tax. If its pure cash assets that's one thing but high value non-cash assets are different.

I would be open to an amendment that exempts most sole proprietorships or partnerships. Perhaps farm land and miscellaneous property could qualify for an exemption, too

[Devout Centrist]

Presenting an amendment:

SENATE BILL
To strengthen the estate tax and provide a bulwark against an oligarchy

Be it enacted in both Houses of Congress

Section 1; Title
1. This act may be cited as the "Responsible Estate Tax Act "
Section 2; Substance
1. The minimum value of estate subject to the estate tax shall be $3.5 million.
2. The estate tax brackets shall be adjusted as follows;
a) 45% tax shall be paid for the value of an estate between $3.5 million and $10 million.
b) 50% tax shall be paid for the value of an estate between $10 million and $50 million.
c) 55% tax shall be paid for the value of an estate in excess of $50 million.
3. A 10% surtax shall be imposed on the value of estates above $500 million.
4. The rules regarding grantor retained annuity trusts shall be expanded by-
a) The right to receive fixed amounts from an annuity shall last for a term of not less than 10 years and that such fixed amounts not decrease during the first 10 years of the annuity term.
b) The remainder interest shall have a value greater than 10% when transferred.
5. The generation-skipping transfer tax exemption is eliminated for any grantor trust that whose termination date is 50 years or less in duration.
6. The basic estate tax exclusion shall amount to $3.5 million.
7. The reduction in valuations of farmland for estate tax purposes shall increase to $3 million.
a) This reduction shall be adjusted to inflation after 2020.
8. The maximum estate tax exclusion for contributions of conservation easements shall increase to $2 million.
9. The annual gift tax exclusion shall be adjusted to limit the aggregate annual amount of such exclusion to twice the current exclusion amount for certain types of transfers, these being
a) A transfer in trust.
b) A transfer of an interest in a pass through entity.
c) A transfer of an interest subject to a prohibition on sale
d) Any other transfer of property that cannot be immediately liquidated by the donee.
10. Executors of estates and donors of gifts shall be required to file a gift tax return to disclose to the Department of the Treasury, and to recipients of any interest in an estate or a gift, information identifying the value of each interest received.
11. Any establishment classified as a sole proprietorship or partnership shall be subject to an estate tax of 20% above a fair market valuation of $50 million
12. Land used for farming or ranching shall be subject to an estate tax of 20% above a fair market valuation of $50 million
Section 3; Implementation
1. All changes in this legislation shall take effect in the first fiscal year following its passage into law.

[Southern Senator North Carolina Yankee]

SENATE BILL
To strengthen the estate tax and provide a bulwark against an oligarchy

Be it enacted in both Houses of Congress

Section 1; Title
1. This act may be cited as the "Responsible Estate Tax Act "
Section 2; Substance
1. The minimum value of estate subject to the estate tax shall be $3.5 million.
2. The estate tax brackets shall be adjusted as follows;
a) 45% tax shall be paid for the value of an estate between $3.5 million and $10 million.
b) 50% tax shall be paid for the value of an estate between $10 million and $50 million.
c) 55% tax shall be paid for the value of an estate in excess of $50 million.
3. A 10% surtax shall be imposed on the value of estates above $500 million.
4. The rules regarding grantor retained annuity trusts shall be expanded by-
a) The right to receive fixed amounts from an annuity shall last for a term of not less than 10 years and that such fixed amounts not decrease during the first 10 years of the annuity term.
b) The remainder interest shall have a value greater than 10% when transferred.
5. The generation-skipping transfer tax exemption is eliminated for any grantor trust that whose termination date is 50 years or less in duration.
6. The basic estate tax exclusion shall amount to $3.5 million.
7. The reduction in valuations of farmland for estate tax purposes shall increase to $3 million.
a) This reduction shall be adjusted to inflation after 2020.
8. The maximum estate tax exclusion for contributions of conservation easements shall increase to $2 million.
9. The annual gift tax exclusion shall be adjusted to limit the aggregate annual amount of such exclusion to twice the current exclusion amount for certain types of transfers, these being
a) A transfer in trust.
b) A transfer of an interest in a pass through entity.
c) A transfer of an interest subject to a prohibition on sale
d) Any other transfer of property that cannot be immediately liquidated by the donee.
10. Executors of estates and donors of gifts shall be required to file a gift tax return to disclose to the Department of the Treasury, and to recipients of any interest in an estate or a gift, information identifying the value of each interest received.
11. Any establishment classified as a sole proprietorship or partnership shall be subject to an estate tax of 20% above a fair market valuation of $50 million
12. Land used for farming or ranching shall be subject to an estate tax of 20% above a fair market valuation of $50 million
Section 3; Implementation
1. All changes in this legislation shall take effect in the first fiscal year following its passage into law.

Sponsor Feedback: origination
Status: Senators have 24 hours to object.

[Southern Senator North Carolina Yankee]

The amendment is adopted.

[Devout Centrist]

I think this should fix most of the concerns that Mr. Reactionary brought forward. Does anyone else have an objection?

[Southern Senator North Carolina Yankee]

Did we ever get the second cost analysis?

[Devout Centrist]

Did we ever get the second cost analysis?

Not yet, I will wait till we have this bill scored before moving forward.

[Fmr. Representative Encke]

I'm almost done with this. It took longer than expected because the RL exclusion amount is way higher and so recent data isn't available for estates in the 3.5-5 million range and I had to find other sources.

Question: In your amendment (Section 2.11 and 2.12), is the intent to exempt those categories from estate tax so long as they are valued below 50 million? If so, that should probably be clarified in the bill, because as written, it seems to suggest that the tax rate is still 50% in the 10-50 million range and then decreases to 20% above 50 million (I might be mistaken, idk).

[Devout Centrist]

I'm almost done with this. It took longer than expected because the RL exclusion amount is way higher and so recent data isn't available for estates in the 3.5-5 million range and I had to find other sources.

Question: In your amendment (Section 2.11 and 2.12), is the intent to exempt those categories from estate tax so long as they are valued below 50 million? If so, that should probably be clarified in the bill, because as written, it seems to suggest that the tax rate is still 50% in the 10-50 million range and then decreases to 20% above 50 million (I might be mistaken, idk).

I'll rewrite it.

[Devout Centrist]

Proposing an amendment:

SENATE BILL
To strengthen the estate tax and provide a bulwark against an oligarchy

Be it enacted in both Houses of Congress

Section 1; Title
1. This act may be cited as the "Responsible Estate Tax Act "
Section 2; Substance
1. The minimum value of estate subject to the estate tax shall be $3.5 million.
2. The estate tax brackets shall be adjusted as follows;
a) 45% tax shall be paid for the value of an estate between $3.5 million and $10 million.
b) 50% tax shall be paid for the value of an estate between $10 million and $50 million.
c) 55% tax shall be paid for the value of an estate in excess of $50 million.
3. A 10% surtax shall be imposed on the value of estates above $500 million.
4. The rules regarding grantor retained annuity trusts shall be expanded by-
a) The right to receive fixed amounts from an annuity shall last for a term of not less than 10 years and that such fixed amounts not decrease during the first 10 years of the annuity term.
b) The remainder interest shall have a value greater than 10% when transferred.
5. The generation-skipping transfer tax exemption is eliminated for any grantor trust that whose termination date is 50 years or less in duration.
6. The basic estate tax exclusion shall amount to $3.5 million.
7. The reduction in valuations of farmland for estate tax purposes shall increase to $3 million.
a) This reduction shall be adjusted to inflation after 2020.
8. The maximum estate tax exclusion for contributions of conservation easements shall increase to $2 million.
9. The annual gift tax exclusion shall be adjusted to limit the aggregate annual amount of such exclusion to twice the current exclusion amount for certain types of transfers, these being
a) A transfer in trust.
b) A transfer of an interest in a pass through entity.
c) A transfer of an interest subject to a prohibition on sale
d) Any other transfer of property that cannot be immediately liquidated by the donee.
10. Executors of estates and donors of gifts shall be required to file a gift tax return to disclose to the Department of the Treasury, and to recipients of any interest in an estate or a gift, information identifying the value of each interest received.
11. Any establishment classified as a sole proprietorship or partnership shall have an estate tax exemption of $50 million and shall be subject to an estate tax of 20% above a fair market valuation of $50 million
12. Land used for farming or ranching shall have an estate tax exemption of $50 million and shall be subject to an estate tax of 20% above a fair market valuation of $50 million.
Section 3; Implementation
1. All changes in this legislation shall take effect in the first fiscal year following its passage into law.

[Fmr. Representative Encke]

Analysis of Estate Tax Plan

Important Note: In the FY2019 budget I listed an estate tax and a 'flat tax.' That was incorrectly labeled 'flat tax' (because I had copy/pasted the template that I used to calculate the payroll taxes) and should actually be labeled the gift tax. Therefore the estate tax revenues from 2019 were actually 27.9 billion, not 29.6 billion.

That being said, here is the analysis of the estate tax bill. The original (unamended) bill raises around 38.7 billion dollars, which is fairly consistent with the 'more than 35 billion' estimate from DC. Since the estate tax was already raised to 45% last year, this represents a smaller increase in revenues than it would if it were being applied in RL. Also the farm/business exemptions lower revenues to 34.5 billion, which is the final estimate, and represents a net increase of 6.6 billion from last year's numbers.

[Devout Centrist]

Many thanks, Encke

[Southern Senator North Carolina Yankee]

SENATE BILL
To strengthen the estate tax and provide a bulwark against an oligarchy

Be it enacted in both Houses of Congress

Section 1; Title
1. This act may be cited as the "Responsible Estate Tax Act "
Section 2; Substance
1. The minimum value of estate subject to the estate tax shall be $3.5 million.
2. The estate tax brackets shall be adjusted as follows;
a) 45% tax shall be paid for the value of an estate between $3.5 million and $10 million.
b) 50% tax shall be paid for the value of an estate between $10 million and $50 million.
c) 55% tax shall be paid for the value of an estate in excess of $50 million.
3. A 10% surtax shall be imposed on the value of estates above $500 million.
4. The rules regarding grantor retained annuity trusts shall be expanded by-
a) The right to receive fixed amounts from an annuity shall last for a term of not less than 10 years and that such fixed amounts not decrease during the first 10 years of the annuity term.
b) The remainder interest shall have a value greater than 10% when transferred.
5. The generation-skipping transfer tax exemption is eliminated for any grantor trust that whose termination date is 50 years or less in duration.
6. The basic estate tax exclusion shall amount to $3.5 million.
7. The reduction in valuations of farmland for estate tax purposes shall increase to $3 million.
a) This reduction shall be adjusted to inflation after 2020.
8. The maximum estate tax exclusion for contributions of conservation easements shall increase to $2 million.
9. The annual gift tax exclusion shall be adjusted to limit the aggregate annual amount of such exclusion to twice the current exclusion amount for certain types of transfers, these being
a) A transfer in trust.
b) A transfer of an interest in a pass through entity.
c) A transfer of an interest subject to a prohibition on sale
d) Any other transfer of property that cannot be immediately liquidated by the donee.
10. Executors of estates and donors of gifts shall be required to file a gift tax return to disclose to the Department of the Treasury, and to recipients of any interest in an estate or a gift, information identifying the value of each interest received.
11. Any establishment classified as a sole proprietorship or partnership shall have an estate tax exemption of $50 million and shall be subject to an estate tax of 20% above a fair market valuation of $50 million
12. Land used for farming or ranching shall have an estate tax exemption of $50 million and shall be subject to an estate tax of 20% above a fair market valuation of $50 million.
Section 3; Implementation
1. All changes in this legislation shall take effect in the first fiscal year following its passage into law.

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Sponsor Feedback: Origination
Status: Senators have 24 hours to object.

[Southern Senator North Carolina Yankee]

The amendment is adopted.