Democrats' wish list of revenue proposals surfaces as super-committee convenes. On September 7, a day ahead of the first, organizational meetings of the Joint Select Committee (JSC, also know as the super-committee), House Democrats floated an unofficial summary of revenue-raising provisions they intend to submit to the JSC. While the results are unclear, taxpayers should keep their eye on the “talk.”
What might happen to income taxes?
A surtax would reduce an individual taxpayer's tax savings from "tax expenditures" by 5% of the amount by which adjusted gross income exceeds some threshold amount. This might mean no charitable, home mortgage, or state income tax deductions for the really high income taxpayers. There has been much talk of this.
What about tax rates?
A 5.4% surcharge, which would be imposed on modified adjusted gross income over. Read this with the restriction on deductions above — it could bite!
What about estate taxes?
One proposal would impose a consistency requirement on basis for estate tax and income tax purposes (current law does not explicitly require the basis of property in the recipient's hands to be the same as the estate's basis). GRATs (grantor retained annuity trusts) would be required to have a minimum term of ten years and a remainder interest greater than zero, and a category of restrictions would be ignored for purposes of valuing an interest in a family controlled entity transferred to a member of the family if, after the transfer, the restriction will lapse or may be removed by the transferor or the transferee's family. Finally, the estate tax rules would revert to 2009 levels in 2012 (instead of reverting to 2009 levels in 2013, as under current law).
What does this mean?
Act now! Plan now.
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