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News & Events
House Passes Bill To Extend the Bush-Era Tax Cuts for 2013
There is not too much to report for August 2012. Republicans in the House of Representatives continue to push forward bills that reflect their vision of tax reform while the Democrats in the Senate try to advance their own vision, one diametrically opposed to that of the Republicans. And neither side is budging.
House Passes Bill To Extend the Bush-Era Tax Cuts for 2013 –
Largely on the strength of Republican votes, the House of Representatives voted 256 to 171 on August 1, 2012, in favor of the Job Protection and Recession Prevention Bill of 2012 (H.R. 8). Under H.R. 8, all of the 2001 and 2003 income tax cuts made during President Bush's administration are to be extended to all taxpayers through at least the end of 2013. On the same day, the House, by a vote of 170-257, defeated a counter bill introduced by House Democrats that would have extended these tax cuts only for those families earning up to $250,000 annually.
House Passes Bill Calling For A Process to Completely Overhaul the Internal Revenue Code
– On August 2, 2012, the House voted 232-189 in favor of the passage of the "Pathway to Job Creation Through A Simpler, Fairer Tax Code Act of 2012" (H.R. 6169). The Act is intended to implement an expedited process by which Congress could enact fundamental tax reform sometime in 2013. Under the bill, the chairman of the House Ways and Means Committee must introduce a tax reform bill in the House no later than April 30, 2013. The bill must further accomplish, at a minimum, the following:
consolidate the current six individual tax brackets into not more than two brackets of 10% and up to no more than 25%;
repeal the alternative minimum tax;
broaden the tax base to certain as yet unspecified levels; and
change the international business tax system from a worldwide system of taxation to a territorial system (i.e., one that taxes only U.S. source income).
H.R 6169 is to be jointly enrolled with H.R. 8, before being sent to the Senate. All indications now are that the jointly enrolled bill will not be approved by the Senate.
Democrats and Republicans Still Clawing and Scratching Over the Post-2012 Fate of the Federal Estate, Gift and Generation Skipping Tax
– One truly needs a scorecard to keep up with the dueling legislation concerning the future of the federal transfer taxes (estate, gift, and generation skipping transfer ("GST") taxes). The following is a brief synopsis of recent developments:
On July 17, 2012, Senator Harry Reid (D-NV) introduced The Middle Class Tax Cut Bill which, in addition to offering income tax breaks to certain taxpayers, would have also permanently reduced the basic exclusion amount from $5.12 million to $3.5 million, allowed the gift tax exclusion amount to drop to $1 million and raised the top transfer tax rate from 35% to 45%. Senator Reid subsequently deleted from this bill the transfer tax provisions. So, if nothing else is done by Congress this year, effective January 1, 2013, the tax rates and exclusion amounts will automatically revert to their 2000 levels.
On July 19, 2012, Senator John Boozman (R-AK) introduced a bill (S. 3403) to permanently repeal all transfer taxes.
On July 23, 2012, Senator Mike Lee (R-UT), introduced a bill (S. 3420) to repeal the estate and GST taxes, though not the federal gift tax (which would be retained with a $5 million exemption and a 35% top tax rate).
On July 30, 2012, Representative Sander Levin (D-MI) introduced a bill (H.R. 16), the "Sensible Estate Tax Relief Act of 2012", which, effective January 1, 2013, would reduce the transfer tax exemptions to $3.5 million, raise the top transfer tax rate to 45%, and generally suspend the sunset of the 2001 transfer tax changes until January 1, 2014.
Thus far, none of these bills have passed either the House or the Senate.
You’re Invited! International Transactions & the New World Order
Wednesday, August 8, 2018 | 2:15 - 6:00 PM | UHY’s training center in Farmington Hills