HR 1277 IH

To amend the Internal Revenue Code of 1986 to reduce estate tax rates by 20 percent, to increase the unified credit against estate and gift taxes to the equivalent of a $2,500,000 exclusion and to provide an inflation adjustment of such amount, and for other purposes.

March 28, 2001

Mrs. LOWEY 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 tax rates by 20 percent, to increase the unified credit against estate and gift taxes to the equivalent of a $2,500,000 exclusion and to provide an inflation adjustment of such amount, 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 Reduction Act of 2001'.

SEC. 2. 20 PERCENT REDUCTION IN ESTATE TAX RATES; REPEAL OF PHASEOUT OF GRADUATED RATES.

(a) IN GENERAL- Subsection (c) of section 2001 of the Internal Revenue Code of 1986 is amended to read as follows:

`(c) RATE SCHEDULE-

The tentative tax is:

Not over $10,000

14.4% of such amount.

Over $10,000 but not over $20,000

$1,440, plus 16% of the excess of such amount over $10,000

Over $20,000 but not over $40,000

$3,040, plus 17.6% of the excess of such amount over $20,000

Over $40,000 but not over $60,000

$6,560, plus 19.2% of the excess of such amount over $40,000

Over $60,000 but not over $80,000

$10,400, plus 20.8% of the excess of such amount over $60,000

Over $80,000 but not over $100,000

$14,560, plus 22.4% of the excess of such amount over $80,000

Over $100,000 but not over $150,000

$19,040, plus 24% of the excess of such amount over $100,000

Over $150,000 but not over $250,000

$31,040, plus 25.6% of the excess of such amount over $150,000

Over $250,000 but not over $500,000

$56,640, plus 27.2% of the excess of such amount over $250,000

Over $500,000 but not over $750,000

$124,640, plus 29.6% of the excess of such amount over $500,000

Over $750,000 but not over $1,000,000

$198,640, plus 31.2% of the excess of such amount over $750,000

Over $1,000,000 but not over $1,250,000

$276,640, plus 32.8% of the excess of such amount over $1,000,000

Over $1,250,000 but not over $1,500,000

$358,640, plus 34.4% of the excess of such amount over $1,250,000

Over $1,500,000 but not over $2,000,000

$444,640, plus 36% of the excess of such amount over $1,500,000

Over $2,000,000 but not over $2,500,000

$624,640, plus 39.2% of the excess of such amount over $2,000,000

Over $2,500,000 but not over $3,000,000

$820,640, plus 42.4% of the excess of such amount over $2,500,000

Over $3,000,000

$1,032,640, plus 44% of the excess of such amount over $3,000,000'.

(b) EFFECTIVE DATE- The amendment 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 INCREASED TO EQUIVALENT OF $2,500,000 EXCLUSION; INFLATION ADJUSTMENT OF UNIFIED CREDIT.

(a) INCREASE IN UNIFIED CREDIT-

(1) IN GENERAL- Subsection (c) of section 2010 of the Internal Revenue Code of 1986 (relating to applicable credit amount) is amended by striking all that follows `were the applicable exclusion amount' and inserting `. For purposes of the preceding sentence, the applicable exclusion amount is $2,500,000.'

(2) CONFORMING AMENDMENT- Subparagraph (A) of section 2057(a)(3) of such Code is amended by striking `$625,000' and inserting `the excess of the applicable exclusion amount (determined without regard to this paragraph) over $675,000'.

(b) INFLATION ADJUSTMENT- 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) COST-OF-LIVING ADJUSTMENT- In the case of any decedent dying, and gift made, in a calendar year after 2001, the $2,500,000 amount set forth in subsection (c) shall be increased by an amount equal to--

`(1) $2,500,000, multiplied by

`(2) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting `calendar year 2000' 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.'

(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