To amend the Internal Revenue Code of 1986 to reduce estate and gift tax rates, and for other purposes.

June 18, 2003

Mr. BEREUTER introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to reduce estate and gift tax rates, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Estate Tax Relief Act of 2003'.

SEC. 2. REDUCTION OF ESTATE TAX RATES.

(a) IN GENERAL- Section 2001 of the Internal Revenue Code of 1986 (relating to estate tax) is amended by striking subsections (b) and (c) and by inserting after subsection (a) the following new subsections:

`(b) COMPUTATION OF TAX- The tax imposed by this section shall be applicable percentage of the amount equal to the excess (if any) of--

`(1) the sum of--

`(A) the amount of the taxable estate, and

`(B) the amount of the adjusted taxable gifts, over

`(2) the aggregate amount of tax paid under chapter 12 with respect to gifts made by the decedent after December 31, 1976.

For purposes of the preceding sentence, the term `applicable percentage' means the highest rate of tax applicable under section 1 for a taxable year beginning in the calendar year in which the decedent dies (or, for purposes of section 2502, the gift is made).

`(c) ADJUSTED TAXABLE GIFTS- For purposes of paragraph (1)(B), the term `adjusted taxable gifts' means the total amount of the taxable gifts (within the meaning of section 2503) made by the decedent after December 31, 1976, other than gifts which are includible in the gross estate of the decedent.'.

(b) CONFORMING AMENDMENTS-

(1) Section 2010(c) of such Code is amended by striking `the rate schedule set forth in section 2001(c)' and inserting `section 2001'.

(2) Subsection (b) of section 2101 of such Code is amended to read as follows:

`(b) COMPUTATION OF TAX- The tax imposed by this section shall be the amount equal to the excess (if any) of--

`(1) a tax computed under section 2001 on the sum of--

`(A) the amount of the taxable estate, and

`(B) the amount of the adjusted taxable gifts, over

`(2) the aggregate amount of tax paid under chapter 12 with respect to gifts made by the decedent after December 31, 1976.'.

(3) Section 2502 of such Code is amended to read as follows:

`SEC. 2502. RATE OF TAX.

`(a) GENERAL RULE- The tax imposed by section 2501 for each calendar year shall be an amount equal to--

`(1) the tax computed under section 2001 on the sum of the taxable gifts for such calendar year, over

`(2) the tax computed under section 2001 on the sum of the taxable gifts for each of the preceding calendar periods.

`(b) TAX TO BE PAID BY DONOR- The tax imposed by section 2501 shall be paid by the donor.'.

(4) Section 6601(j)(2)(A)(i) of such Code is amended by striking `the rate schedule set forth in section 2001(c)' and inserting `section 2001'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to estates of decedents dying, and gifts made, after the date of the enactment of this Act.

SEC. 3. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES INCREASED TO EXCLUSION EQUIVALENT OF $10,000,000; INFLATION ADJUSTMENT OF CREDIT.

(a) IN GENERAL- Subsection (c) of section 2010 of the Internal Revenue Code of 1986 (relating to applicable credit amount) is amended to read as follows:

`(c) APPLICABLE CREDIT AMOUNT- For purposes of this section, the applicable credit amount is the amount of tax which would be determined under section 2001 if the amount with respect to which such tax is to be computed were the applicable exclusion amount. For purposes of the preceding sentence, the applicable exclusion amount is $10,000,000.'.

(b) INFLATION ADJUSTMENT-

(1) IN GENERAL- Section 2010 of such Code is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection:

`(d) INFLATION ADJUSTMENT- In the case of any decedent dying, and gift made, in a calendar year after 2003, the $10,000,000 amount set forth in subsection (c) shall be increased by an amount equal to--

`(1) $10,000,000, multiplied by

`(2) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting `calendar year 2002' for `calendar year 1992' in subparagraph (B) thereof.

If any amount as adjusted under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.'.

(2) CONFORMING AMENDMENT- Section 6018(a)(1) of such Code is amended by striking `section 2010(c)' and inserting `section 2010'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to estates of decedents dying, and gifts made, after the date of the enactment of this Act.

SEC. 4. REPEAL OF ESTATE TAX BENEFIT FOR FAMILY-OWNED BUSINESS INTERESTS.

(a) IN GENERAL- Section 2057 of the Internal Revenue Code of 1986 (relating to family-owned business interests) is hereby repealed.

(b) CONFORMING AMENDMENTS-

(1) Paragraph (10) of section 2031(c) of such Code is amended by inserting `(as in effect on the day before the date of the enactment of the Estate Tax Relief Act of 2001)' before the period.

(2) The table of sections for part IV of subchapter A of chapter 11 of such Code is amended by striking the item relating to section 2057.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to estates of decedents dying, and gifts made, after the date of the enactment of this Act.

END