In June, 2016, the House Republicans released “A Better Way: Our Vision for a Confident America”. In it, they reiterated their oft-repeated promise of repealing the federal estate tax and the generation-skipping transfer tax. However, there is no mention of a repeal of the gift tax. This is consistent with the “Death Tax Repeal Act of 2015” introduced in the House and Senate in the spring of 2015. The “Death Tax Repeal Act of 2015” provided for the repeal of estate and generation-skipping transfer taxes; however, it retained the current law with respect to the annual gift tax exclusion amount and the current lifetime exemption ($5.45 million for 2016). The maximum rate for the gift tax would be 35%. All transfers into trust would be treated as taxable gifts unless the trust was a “grantor trust”. Finally our current carryover basis rules and stepped up basis at death rules would continue to apply.
Donald Trump’s Tax Plan as related on his website (www.donaldjtrump.com/policies/tax-plan) states that he intends to repeal the estate tax with a catch. Capital gains on appreciated assets in excess of $10 million is subject to tax. (No tax rate is stated but the current highest capital gains tax rate is 20%. It seems likely that this rate would be applicable.) However, appreciation on small businesses and family farms are to be exempt from this capital gains death tax. In addition, contributions of appreciated assets to private charities established by the decedent or the decedent’s relatives would be disallowed. There is no mention of the gift tax or the generation-skipping transfer tax (this is a tax on transfers to persons more than one generation below that of the transferor and the law on it is very complex).
These plans are not entirely reconcilable. Under President-elect Trump’s plan, a 20% capital gains tax would be imposed on appreciated assets owned at death if the appreciation was in excess of $10 million and the assets in question are not family farms or small businesses. Because it would be very simple to avoid this tax by giving assets away shortly before death (and frankly, this would not be a problem for most Americans), it seems to me that his tax plan would have to address the issue of the gift tax in some fashion.
However, I would anticipate that the desire in Congress to fully repeal the estate tax and the generation skipping transfer tax (again) would likely pressure Mr. Trump to alter his plan to accommodate his fellow Republicans. After all, his plan as stated is not actually workable. The Republican vision as set forth in the “Death Tax Repeal Act of 2015” may well get worked over some more when the lawmakers actually think they have a chance to pass tax reform. The current proposal has “planning opportunities” that would make avoidance of the gift tax possible.
So, what does this mean for you? Unfortunately it means that we are likely walking into a period of uncertainty for how long these taxes may remain on the books and how they may be transformed by Congress. Given that a Republican led Congress also wants to balance the budget, it is possible that these changes may phase in over time. Should you delay making annual exclusion gifts in 2016? Absolutely not. The changes, if they come about, will not be effective before Mr. Trump takes office. Should you stay in touch with the attorneys at the Hook Law Center? Absolutely. We will analyze the changes and inform you of how they will affect you and your existing plan and whether you need to make any changes. However, since the last round of estate and gift tax reform increased the lifetime exemptions in excess of $5 million, most of you will not need to alter your current estate plans to accommodate the tax law changes. Your plans already reflect that you are not subject to the various taxes and are structured to protect your families and your non-tax related goals. For those of you who have been facing an estate or gift tax issue currently, stay tuned.
Ask Kit Kat – Learning From Bees
Hook Law Center: Kit Kat, what can you tell us about bees in northern Alaska which are helping scientists gather information about climate change?
Kit Kat: Well, I think this is fascinating. Scientists from the University of California, Riverside traveled to Prudhoe Bay, north of Fairbanks, along the Dalton Highway, made famous by the TV show “Ice Road Truckers.” They were looking for the Polaris bumblebee, known scientifically as the Bombus polaris. Increasingly as the earth’s climate warms, this particular bumblebee has migrated north into the Arctic, where climate change is happening at a fast pace. Climate change in the Arctic is evident by the fact that areas once covered only in low plants and lichens are now able to support willow trees. The expedition is being financed by a grant to foster collaboration among scientists. Six scientists participated. Their job—collect specimens and bring them back to the lab for further testing.
One of the scientists, Dr. S. Hollis Woodard, calls the bumblebee ‘…the pandas of the insect world.’ They are the largest of bees, and like the panda, they are big and move slowly. In contrast to the honeybee which tend to live in large colonies of 100,000 bees or more, the bumblebee lives in small clusters, ranging from 50 to a couple of hundred. Most bumblebee colonies live for one season, Most die as the weather turns cold. However, a few hearty females that have already mated, seek refuge under the tundra, and in essence hibernate until spring. They are the only bees which manage to survive in the Arctic, where temperatures go as low as 60 below zero. They do this by shivering their muscles. This can raise their body temperature to a toasty 95 degrees, even though the outside temperature may be at the freezing point.
There is some urgency to the scientists’ work. Just this past September of 2016, the US Fish and Wildlife Service proposed that the rusty patched bumblebee, previously very common, be considered endangered. There are 250 bumblebee species, but scientists become alarmed when even one shows signs of decline. Each bee that is captured is placed in a plastic tube, which is then given a shot of ordinary compressed air from a can available at the average grocery store. This immobilizes the bees. Then bodies and inside organs are separated and placed in a solution to preserve them. Back at the lab in California, they will conduct the examinations which will tell us more about the bees, how they survive in such adverse conditions, and possibly the implications about changing climate. (James Gorman, “Six Scientists, 1,000 Miles, One Prize: The Arctic Bumblebee,” The New York Times, Oct. 7, 2016) (http://nyti.ms/2dFqzYi)
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The general population of the United States has shown a long-term, marked resistance to the relaxation of immigration standards. This prevailing sentiment has, at times, translated into overtly anti-immigrant manifestations. Historically, these stances have been most pronounced during economically distressed times. In such circumstances, nativist groups lobby for restrictions to immigration on the premise that a restricted or eliminated flow of immigrants would help to preserve the dwindling number of jobs for Americans.
With the emergence of the Tea Party movement and the evidence of its strength within the Republican Party in recent years, many Republicans — afraid of being “primaried” by a more conservative Tea Party acolyte — have proclaimed their conservative bone fides on such sensitive issues as abortion, taxes and immigration. This phenomenon also tends to keep compromise-minded legislators from straying far from the conservative line.
But past statistics seem to suggest that election-year pressures may not be as pivotal as they are touted to be — at least not on the issue of immigration.
If one were to review the record over the last 50 years (a period that includes some of the most contentious immigration legislation passed in American history), it would become quite evident that election-year status has little bearing on the passage of legislation on immigration. Indeed, of the 81 immigration laws enacted during the five-decade-long period, 70 percent were passed in the same year in which a congressional election was scheduled.
It may seem counterintuitive that the prospects for immigration reform are better in an election year. But with the vast majority of immigration laws focused on such election-salient issues as the economy and law enforcement, immigration is quite magnetic as a running platform for an officeholder.
With the electoral environment more conducive to members of Congress running on immigration reform, perhaps it should be unsurprising that on January 30, 2014, House Speaker John Boehner, R-Ohio, promulgated a set of principles his caucus adopted that is more flexible and accommodating of an overhaul of the nation’s immigration laws.
A. Banerjee is a Houston immigration lawyer in Texas. Before selecting an attorney, contact the Law Offices of Annie Banerjee by visiting their information filled web site at http://www.visatous.com.
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President Barack Obama has stated repeatedly that he continues to push for immigration reform. Even the government shutdown did not change that stance. While the immediate shutdown crisis has passed, plenty of flotsam and jetsam has been left behind to make its own messes. The president’s perseverance of agenda may be admirable, but against the oncoming wave of yet another debt crisis, reality may take its toll.
Some would call it inevitable, given the current House climate of politicking, posturing, posing and petulance. For many, the climate has shown the Republican Party to be overly concerned with re-election and dangerously ignorant of the will of the nation.
At such a juncture, how can the president hope to call for immigration reform and be heard? Chemical weapons in Syria, domestic surveillance programs and health care glitches: each all-consuming crisis has followed the last without pause for breath. Unfortunately, each pushes immigration further from central concern, leaving more than 11 million immigrants to wait and wonder.
Fortunately, some progress has been made in the last year. An immigration overhaul was passed in June, but stalled in the House over the legal status of illegal aliens. For many Republicans, changing an immigrant’s illegal status would break the law. Some media pundits speculate that the summer’s resistance was only a Republican ploy to break reform into small, slow pieces. If so, it may have worked.
Obama’s most recent comments indicate that he would accept a piecemeal reform process in the House (as long as the work would be achieved on that longer timeline). But would a piecemeal approach to immigration reform work? Chances are poor; changing the entire immigration system without a holistic approach will only compound the problems. Fix one leak, and three more will spring into being. The process would become exhausting and overwhelming for even well-intentioned Representatives.
If President Obama is to be believed, John Boehner stands at the center of resistance to immigration reform. The House Speaker appears unwilling to call the bill on the floor. But tensions have spread beyond individuals to absorb both parties. Republicans refuse to accept amnesty; Democrats refuse to eliminate the option. Against clashing parties and an unending series of national crises, immigration reform will find it difficult to resurface in the near future.
The post Amidst Budget and Debt Ceiling Turmoil, Will Immigration Reform Resurface? first appeared on SEONewsWire.net.]]>