Senator Bernie Sanders (I-VT) introduced an Estate Tax bill on Thursday, June 24, with a new twist: the Billionaire’s Surtax.
The bill, which is co-sponsored by Senators Sheldon Whitehouse (D-RI), Tom Harkin (D-IA) and Sherrod Brown (D-OH) and would be retroactive to January 1, 2010, calls for a restoration of the 2009 exemption of $3.5 million per individual. Under the bill, tax rates would be as follows:
– 45% for estates valued between $3.5 million and $10 million;
– 50% for estates between $10 million and $50 million; and
– 55% for estates exceeding $50 million.
Additionally, there would be a 10% “Billionaire’s Surtax” for estates exceeding $1 billion.
It is estimated that the proposed bill would exempt 99.7% of American estates while generating at least $264 billion over a decade to help lower the national debt.
According to the release from the Senator’s office, the bill also calls for the closing of “Estate and Gift Tax loopholes as President Obama proposed in his budget for next year,” which the White House estimated would generate at least $23.7 billion in revenue over 10 years. This includes imposing a 10-year minimum term for Grantor Retained Annuity Trusts (GRATs), which would impose a significant burden on their use in Estate Tax planning.
While practitioners may see each additional proposal as adding mud to the Estate Tax waters, it is a positive sign that there is at least some discussion in Washington about a tax that has so many attorneys’ and clients’ attention. We will see whether Congress can reach a resolution before the calendar strikes January.