National Association of Insurance and Financial Advisors

Tax-Writing House Democrat Introduces Estate Tax Bill

On October 24, Rep. Jimmy Gomez (D-CA), supported by 37 cosponsors, introduced legislation to expand the estate tax. Rep. Gomez, a member of the tax-writing Ways & Means Committee, characterizes his bill as a way to address income inequality.
 
The bill, H.R.4857, is titled the “For the 99.8% Act.” A companion bill, S.309, introduced by Sen. Bernie Sanders (I-VT), is pending in the Senate.
 
The bill would take the top estate tax rate to 77 percent, on estates valued at over $1 billion. The bill provides for graduated estate tax rates, starting at 45 percent on estates valued between $3.5 million and $10 million. The current top estate tax rate is 40 percent, on estates valued at $11.4 million or more. The exclusion amount would be reduced from the 2018 inflation-adjusted level of $11,180 million per person to $3.5 million per person (double those amounts for married couples). The current $14,000 gift tax exclusion would also be modified.
 
H.R.4857 also imposes new estate tax strategy rules, including consistent basis reporting rules applicable to property acquired by gift and transfers in trust, limits on estate tax discounts for persons with minority interests in a business acquired from a decedent, and valuation rules in grantor retained annuity trust situations.
 
Prospects: There is little to no chance that this bill will receive consideration this year, and not much more possibility of action on it next year. However, it is likely to become part of an overall debate on how to address income inequality and, if Democrats increase their power by taking control of the Senate or the White House, odds of it becoming part of a tax debate increase significantly.
 
NAIFA Staff Contacts: Diane Boyle, Senior Vice President – Government Relations at DBoyle@naifa.org; Judi Carsrud, Assistant Vice President – Government Relations at jcarsrud@naifa.org.
 
  • Posted November 15, 2019 IN