([ongrt55oftbtI1nittb~tatt5
JOINTCOMMITTEEONTAXATION
imta5bington,E«:
20515-6453
MAR26
2012
MEMORANDUMTO:FROM:Thomas
A.
BartholdSUBJECT:RevenueEstimateThismemorandumisinresponsetoyourrequestofMarch16,2012,forarevenueestimateofS.2059,the"PayingaFairShareActof2012"estimatedafterapermanentextensionofa"currentpolicy"baseline.ForthepUIJ>Osefthisestimate,wehaveassumedthe"currentpolicy"baselineimpliesapermanentextensionofthe"EconomicGrowthandTaxReliefReconciliationActof2001
('EGTRRA'),"
the"JobsandGrowthTaxReliefReconciliationActof2003('JGTRRA'),"andthe"AmericanRecoveryandReliefActof2009('ARRA')."Undertheproposal.themaximumstatutoryrateonordinaryincomeis35percentandthemaximumrateoncapitalgainsandqualifieddividendincomeis15percent.(Underpresentlawbeginningin2013,anadditional3.8-percent
tax
will
be
imposedonthenetinvestmentincomeofcertainindividualsandanadditionalhospitalinsurance
tax
equalto0.9percentofwageswithrespecttoemploymentinexcessof$200,000($250.000inthecaseofajointreturn)isalsoimposed.)The"currentpolicy"baselinewouldpermanentlyextendcurrentestateandgift
tax
policy.Underpresentlaw,asmodifiedbyTitleIIIofthe"TaxRelief,UnemploymentInsuranceReauthorization,andJobCreationActof2010(the'TaxReliefAct')."theestateandgifttaxesforestatesofdecedentsdyingandgiftsmadeafter2010generallyareunified,withafivemilliondollarexemptionequivalentamountanda
tax
rateof35percent.ThefivemilliondollarexemptionamountisindexedforinflationfordecedentsdyingandgiftsmadeafterDecember31,20II.
I
ForestatesofdecedentsdyingafterDecember31,2010,andbeforeJanuaryI,2013,survivingspousesgenerallyarepermittedtoutilizetheunusedportionofapredeceasedspouse'sestate
tax
exemption.
In
addition,theTaxReliefActextended,through2012,subtitlesF,G.andHofTitleVofEGTRRA,whichincludespecialrulespertainingtoconservationeasements.thegenerationskippingtransfertax.andtheextensionoftimetopayestatetaxes,respectively.The"currentpolicy"baselinewouldindexthealternativeminimumtax("AMT")exemptionamountforinflationandindextheincomethresholdsforthe28-percentbracketand
t
For2012,theinflation-indexedexemptionamountis$5.12million.
'lCongre5gof
tbt
'ilnitrb
~tatt5
JOINTCOMMITTEEONTAXATION
tmasbington,19«;205l5-6453
TO:
SUBJECT:RevenuetstlmatePage2startingpointofthephaseoutoftheAMTexemptionamount.Also,thebaselinewouldallownon-refundablepersonalcredits
to
applyagainsttheAMT.UnderS.2059,anewtaxwouldbeimposedOncertainhigh-incometaxpayers.Theamountofthe
tax
wouldequaltheexcess
(if
any)ofataxpayer'stentativefairshare
tax
forthetaxableyearoverthesumofthetaxpayer's(a)regular
tax
liability(lessallowablecreditsexceptfortheforeigntaxcredit),(b)alternativeminimumtax,and(c)payroll
tax,
wherethepayrolltaxincludestheemployee'sshareoftheOASDIandHIportionsofFICAtaxes,theadditional3.8-percent
tax
onnetinvestmentincome,andanyself-employmenttaxeslessthedeductionforself-employmenttaxespermittedundersection164(t)oftheCode.Thetaxpayer'stentativefairshare
tax
equals30percentofthetaxpayer'sadjustedgrossincome("AGI")lessmodifiedcharitablecontributions,wheremodifiedcharitablecontributionsequalthetaxpayer'sallowablecharitabledeductionundersection170oftheCodemultipliedbytheratioofthetaxpayer'stotalitemizeddeductionaftertheoveralllimitationofitemizeddeductionsundersection68oftheCodetototalitemizeddeductionbeforetheapplicationofsection68.Thenew
tax
wouldapplytotaxpayerswithAGIinexcessofonemilliondollars($500,000formarriedindividualsfilingaseparatereturn).The
tax
would
be
phasedinfortaxpayerswithAGIbetweenonemilliondollarsandtwomilliondollars($500,000andonemilliondollarsformarriedindividualsfilingaseparatereturn).TheAGIthresholdswouldbeindexedforinflationforyearsafter2013.S.2059wouldbeeffectivefortaxableyearsbeginningafterDecember31,2012.Forpurposesofestimatingtheproposal,wehaveasswnedanenactmentdateof
May
I,2012.Attachment:Table#12-2041
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