Democratic Proposals for Revenue Raising
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The proposal from the White House includes:
- Income surcharge for high income earners – basically a 5% surtax on Adjusted Gross Income in excess of $500,000.
- Repeal high-income tax cuts in 2012 as opposed to 2013.
- Grantor Retained Annuity Trusts (GRATs) – minimum 10 year term for these trusts that are used to pass wealth on to younger family members at very little if any gift tax cost.
- Materially reduce valuation discounts (minority interest and lack of marketability) for family controlled entities such as LLCs and Limited Partnerships.
- Revert to 2009 estate tax parameters for 2012, which would mean a $3.5 million exemption and a 45% rate. I assume spousal portability would go away. The current $5 million exemption is scheduled to expire on December 31, 2012. If Congress takes no action, the exemption will fall to $1 million and the rate will increase to 55%.
