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Information provided on this site is for general guidance only and
is often simplified. Actual IRS procedures are complex, and taxpayers
should obtain professional assistance or use IRS sources for complete
information.
Income
TaxA summary of the income tax
situation of a normal individual.
Income
Tax Rates2006 income tax rates for
'married', 'single' and 'head of household'
categories.
Overseas
Investment IncomeThe IRS has done
a good job of 'catching' just about all
types of overseas income.
The
President's Tax PanelThe Panel made
far-reaching recommendations for reform of
the Tax Code in 2005 - but there is doubt
about their political feasibility.
Estate
TaxA summary of the estate tax and
its future.
The
Estate Tax
Estate
tax is imposed on the transfer of the taxable
estate of every decedent who is a citizen or
resident of the United States. Many types of
lifetime gift are also taxable, and estate tax
is calculated on the the amount of the taxable
estate plus the amount of taxable gifts, less
tax paid on gifts during life.
Low value estates are exempt from taxation.
Until 2003, the limit above which tax applies
was US$1m; under the 2001 Economic Growth and
Tax Relief Reconciliation Act the limit was
increased to US$1.5m for 2004 and 2005, to US$2m
for 2006-2008, and to US$3.5m in 2009. There
are also some exclusions for gifts.
Rules governing the valuation of gifts are,
needless to say, highly complex. There are some
exemptions for gifts between spouses.
The
information given here is a highly abbreviated
version of the Tax Code, for general information;
please refer to a tax professional for accurate
information.
Until 2001, the rates of estate and gifts tax
were as follows:
Up
to $10,000: 18%
From
$10,000 to $20,000: 20%
From
$20,000 to $40,000: 22%
From
$40,000 to $60,000: 24%
From
$60,000 to $80,000: 26%
From
$80,000 to $100,000: 28%
From
$100,000 to $150,000: 30%
From
$150,000 to $250,000: 32%
From
$250,000 to $500,000: 34%
From
$500,000 to $750,000: 37%
From
$750,000 to $1,000,000: 39%
From
$1,000,000 to $1,250,000: 41%
From
$1,250,000 to $1,500,000: 43%
From
$1,500,000 to $2,000,000: 45%
From
$2,000,000 to $2,500,000: 49%
Above
$2,500,000: 50%
The 2001 tax-cutting legislation prescribed
reductions in the maximum rate of tax as follows:
In
calendar year 2003, to 49%
In
calendar year 2004, to 48%
In
calendar year 2005, to 47%
In
calendar year 2006, to 46%
In
calendar years 2007-2009, 45%
The
estate tax is then abolished completely for
the year 2010, but reinstated as from 2011 with
a top rate of 55% and the pre-2001 exemption
level of US$1m. People joke that they will keep
well away from their heirs in 2010!
Many
people believe that the estate tax costs more
than it raises by suppressing investment and
generating unproductive tax avoidance activity.
Some countries have abolished it altogether
and others are considering doing so. Of the
countries that still have an estate tax, the
US has the third highest rate at 46%.
Says
the Cato Institute: 'A . . . cost of the estate
tax is the damage that it causes to saving,
investment, and business activity. The need
to pay an estate tax bill can result in heirs
liquidating
or selling family businesses because such businesses
are often asset rich but cash poor. The estate
tax damages the economy when it destroys ongoing,
job-producing businesses simply to fund added
government consumption.'
Former
chairman of President George W. Bush’s
Council of Economic Advisers, Greg Mankiw, noted
that as a tax on capital, the estate tax likely
reduces US productivity and wages. He concluded
that “repeal of the estate tax would stimulate
growth and raise incomes for everyone.”
Work
has continued in Congress towards a permanent
abolition of the estate tax.
Income
TaxA summary of the income tax
situation of a normal individual.
Income
Tax Rates2006 income tax rates for
'married', 'single' and 'head of household'
categories.
Overseas
Investment IncomeThe IRS has done
a good job of 'catching' just about all
types of overseas income.
The
President's Tax PanelThe Panel made
far-reaching recommendations for reform of
the Tax Code in 2005 - but there is doubt
about their political feasibility.
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sources. Alongside topical, daily news on worldwide
tax developments, you can receive weekly newswires or
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Our 16 constantly
updated intelligence reports cover every important aspect
of 'offshore' and international tax-planning in depth, including
banking secrecy, the EU's savings tax directive, offshore
funds, e-commerce, offshore gaming and transfer pricing. Reports
are available for immediate downloading or as subscription
services with news pages.
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The Lowtax Network 1999 - 2007. Contact
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