Sounds like Congress wants to start helping small businesses? Maybe. The sale of stock in a small business that is issued after March 16, 2010 and through 2011 would be exempt from capital gains taxes. That "costs" $2 billion, according to projections.
The real point of the legislation is to extend Build America Bonds into 2013. That costs $7.5 billion and has little to do with small business. There are many additional provisions, mostly concerned with municipal finance.
How to pay for this? Because all tax breaks now must be offset by tax increases. This one caught my eye:
mandate a 10-year minimum term for grantor retained annuity trusts ($4.5 billion)Really? How many GRATs are created in a year? How big are they? I'd love to see the math behind that $4.5 billion figure, and where the money is coming from. Are they assuming that because short term GRATs won't be created, that money will now be hit by the estate tax? At the enhanced rates scheduled for next year?
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According to The Joint Committee on Taxation, the new limits on GRATs would generate only $12 million in new taxes in 2011. But by 2016 the tax take would exceed half a billion. And by fiscal year 2020, almost a full billion.
This revenue must come from estate, not gift tax. Do you suppose the estimates assume that Congress will leave the bad old estate tax unreformed when it returns next year?
yes, they are required to make no assumptions about future law changes, they absolutely assumed the $1 million exemption and 55% tax rate.
which raises the question, does that now increase the costs of reforming the estate tax? do they take all these incremental changes into account somehow?
from what I've read since, the $4.5 billion isn't from a behavioral change, it's merely the estate tax inclusion of GRATs that will come from failing to survive the new ten-year term.
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