I 

109TH CONGRESS 

1ST SESSION H. R. 1568 

To amend the Internal Revenue Code of 1986 to permanently reduce estate 

and gift tax rates to 30 percent, to increase the exclusion equivalent 

of the unified credit to $10,000,000, and to increase the annual gift 

tax exclusion to $50,000. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 12, 2005 

Mr. LEACH (for himself, Mr. TANNER, and Mr. ABERCROMBIE) introduced the 

following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to permanently 

reduce estate and gift tax rates to 30 percent, to increase 

the exclusion equivalent of the unified credit to 

$10,000,000, and to increase the annual gift tax exclusion to $50,000. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. ESTATE AND GIFT TAX RATES REDUCED TO 30 

4 PERCENT. 

5 (a) ESTATE TAX.— 

6 (1) IN GENERAL.—Section 2001 of the Internal 

7 Revenue Code of 1986 (relating to estate tax) is 
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1 amended by striking subsections (b) and (c) and by 

2 inserting after subsection (a) the following new sub3 section: 

4 ‘‘(b) COMPUTATION OF TAX.—The tax imposed by 

5 this section shall be the amount equal to the excess (if 

6 any) of— 

7 ‘‘(1) 30 percent of the sum of— 

8 ‘‘(A) the amount of the taxable estate, and 

9 ‘‘(B) the amount of the adjusted taxable 

10 gifts, over 

11 ‘‘(2) the aggregate amount of tax paid under 

12 chapter 12 with respect to gifts made by the dece13 dent after December 31, 1976. 

14 For purposes of paragraph (1)(B), the term ‘adjusted tax15 able gifts’ means the total amount of the taxable gifts 

16 (within the meaning of section 2503) made by the dece17 dent after December 31, 1976, other than gifts which are 

18 includible in the gross estate of the decedent.’’. 

19 (2) CONFORMING AMENDMENTS.— 

20 (A) Section 2010(c) of such Code is 

21 amended by striking ‘‘tentative’’ both places it 

22 appears and inserting ‘‘tax’’. 

23 (B) Subsection (b) of section 2101 of such 

24 Code is amended to read as follows: 
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1 ‘‘(b) COMPUTATION OF TAX.—The tax imposed by 

2 this section shall be the amount equal to the excess (if 

3 any) of— 

4 ‘‘(1) 30 percent of the sum of— 

5 ‘‘(A) the amount of the taxable estate, and 

6 ‘‘(B) the amount of the adjusted taxable 

7 gifts, over 

8 ‘‘(2) the aggregate amount of tax paid under 

9 chapter 12 with respect to gifts made by the dece10 dent after December 31, 1976.’’. 

11 (C) Subsection (b) of section 2102 of such 

12 Code is amended— 

13 (i) by striking ‘‘$13,000’’ each place it 

14 appears and inserting ‘‘$20,000’’, and 

15 (ii) by striking ‘‘$46,800’’ and insert16 ing ‘‘$52,500’’. 

17 (D) Section 2201 is amended— 

18 (i) in subsection (a) by striking ‘‘the 

19 rate schedule set forth in subsection (c) 

20 shall be deemed to be the rate schedule set 

21 forth in section 2001(c)’’ and inserting 

22 ‘‘the tax determined under subsection (c) 

23 shall be deemed to be the tax determined 

24 under section 2001(b)’’, and 
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1 (ii) in subsection (c) by striking ‘‘ten2 tative’’ each place it appears. 

3 (b) GIFT TAX.— 

4 (1) IN GENERAL.—Section 2502 of such Code 

5 is amended to read as follows: 

6 ‘‘SEC. 2502. RATE OF TAX. 

7 ‘‘(a) GENERAL RULE.—The tax imposed by section 

8 2501 for each calendar year shall be an amount equal to 

9 30 percent of the sum of the taxable gifts for such cal10 endar year. 

11 ‘‘(b) TAX TO BE PAID BY DONOR.—The tax imposed 

12 by section 2501 shall be paid by the donor.’’. 

13 (2) CONFORMING AMENDMENTS.— 

14 (A) Subchapter A of chapter 12 of such 

15 Code is amended by striking section 2504. 

16 (B) The table of sections for such sub17 chapter is amended by striking the item relat18 ing to section 2504. 

19 (c) ESTATE TAX RETAINED.— 

20 (1) IN GENERAL.—Section 901 of the Economic 

21 Growth and Tax Relief Reconciliation Act of 2001 

22 shall not apply to title V of such Act. 

23 (2) RETENTION.—Subtitles A and E of title V 

24 of the Economic Growth and Tax Relief Reconcili25 ation Act of 2001, and the amendments made by 
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1 such subtitles, are hereby repealed; and the Internal 

2 Revenue Code of 1986 shall be applied as if such 

3 subtitles, and amendments, had never been enacted. 

4 (3) CONFORMING AMENDMENTS.—Subsections 

5 (d), (e), and (f)(3) of section 511 of the Economic 

6 Growth and Tax Relief Reconciliation Act of 2001, 

7 and the amendments made by such subsections, are 

8 hereby repealed; and the Internal Revenue Code of 

9 1986 shall be applied as if such subsections, and 

10 amendments, had never been enacted. 

11 (d) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to estates of decedents dying, and 

13 gifts made, after the date of the enactment of this Act. 

14 SEC. 2. UNIFIED CREDIT INCREASED TO EQUIVALENT OF 

15 $10,000,000 EXCLUSION; INFLATION ADJUST16 MENT OF UNIFIED CREDIT. 

17 (a) IN GENERAL.—Subsection (c) of section 2010 of 

18 the Internal Revenue Code of 1986 (relating to applicable 

19 credit amount) is amended to read as follows: 

20 ‘‘(c) APPLICABLE CREDIT AMOUNT.—For purposes 

21 of this section, the applicable credit amount is the amount 

22 of the tax which would be determined under section 

23 2001(b) if the amount with respect to which such tax is 

24 to be computed were the applicable exclusion amount. For 
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1 purposes of the preceding sentence, the applicable exclu2 sion amount is $10,000,000.’’. 

3 (b) INFLATION ADJUSTMENT.—Section 2010 of such 

4 Code is amended by redesignating subsection (d) as sub5 section (e) and by inserting after subsection (c) the fol6 lowing new subsection: 

7 ‘‘(d) COST-OF-LIVING ADJUSTMENT.—In the case of 

8 any decedent dying, and gift made, in a calendar year 

9 after 2005, the $10,000,000 amount set forth in sub10 section (c) shall be increased by an amount equal to— 

11 ‘‘(1) $10,000,000, multiplied by 

12 ‘‘(2) the cost-of-living adjustment determined 

13 under section 1(f)(3) for such calendar year by sub14 stituting ‘calendar year 2004’ for ‘calendar year 

15 1992’ in subparagraph (B) thereof. 

16 If any amount as adjusted under the preceding sentence 

17 is not a multiple of $10,000, such amount shall be round18 ed to the nearest multiple of $10,000.’’. 

19 (c) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to estates of decedents dying, and 

21 gifts made, after the date of the enactment of this Act. 

22 SEC. 3. ANNUAL GIFT TAX EXCLUSION INCREASED TO 

23 $50,000. 

24 (a) IN GENERAL.—Subsection (b) of section 2503 of 

25 the Internal Revenue Code of 1986 (relating to exclusion 
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1 from gifts) is amended by striking ‘‘$10,000’’ each place 

2 it appears and inserting ‘‘$50,000’’. 

3 (b) RESETTING OF INFLATION ADJUSTMENT.—Para4 graph (2) of section 2503(b) of such Code is amended— 

5 (1) by striking ‘‘1998’’ and inserting ‘‘2005’’, 

6 and 

7 (2) by striking ‘‘1997’’ and inserting ‘‘2004’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to gifts made after December 31, 

10 2004. 

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