I
107TH CONGRESS
1ST SESSION
H. R. 1277
To amend the Internal Revenue Code of 1986 to reduce estate tax rates
by 20 percent, to increase the unified credit against estate and gift
taxes to the equivalent of a $2,500,000 exclusion and to provide an
inflation adjustment of such amount, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 28, 2001
Mrs. LOWEY 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 reduce
estate tax rates by 20 percent, to increase the unified
credit against estate and gift taxes to the equivalent
of a $2,500,000 exclusion and to provide an inflation
adjustment of such amount, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Estate Tax Reduction
Act of 2001’’.
SEC. 2. 20 PERCENT REDUCTION IN ESTATE TAX RATES; RE-
PEAL OF PHASEOUT OF GRADUATED RATES.
(a) IN GENERAL.—Subsection (c) of section 2001 of
the Internal Revenue Code of 1986 is amended to read
as follows:
‘‘(c) RATE SCHEDULE.—
‘‘If the amount with respect
to which the tentative tax
is to be computed is:
The tentative tax is:
Not over $10,000 ..........................
14.4% of such amount.
Over 
$10,000 
but 
not 
over
$20,000.
$1,440, plus 16% of the excess of
such amount over $10,000
Over 
$20,000 
but 
not 
over
$40,000.
$3,040, plus 17.6% of the excess of
such amount over $20,000
Over 
$40,000 
but 
not 
over
$60,000.
$6,560, plus 19.2% of the excess of
such amount over $40,000
Over 
$60,000 
but 
not 
over
$80,000.
$10,400, plus 20.8% of the excess of
such amount over $60,000
Over 
$80,000 
but 
not 
over
$100,000.
$14,560, plus 22.4% of the excess of
such amount over $80,000
Over 
$100,000 
but 
not 
over
$150,000.
$19,040, plus 24% of the excess of
such amount over $100,000
Over 
$150,000 
but 
not 
over
$250,000.
$31,040, plus 25.6% of the excess of
such amount over $150,000
Over 
$250,000 
but 
not 
over
$500,000.
$56,640, plus 27.2% of the excess of
such amount over $250,000
Over 
$500,000 
but 
not 
over
$750,000.
$124,640, plus 29.6% of the excess
of such amount over $500,000
Over 
$750,000 
but 
not 
over
$1,000,000.
$198,640, plus 31.2% of the excess
of such amount over $750,000
Over $1,000,000 but not over
$1,250,000.
$276,640, plus 32.8% of the excess
of such amount over $1,000,000
Over $1,250,000 but not over
$1,500,000.
$358,640, plus 34.4% of the excess
of such amount over $1,250,000
Over $1,500,000 but not over
$2,000,000.
$444,640, plus 36% of the excess of
such amount over $1,500,000
Over $2,000,000 but not over
$2,500,000.
$624,640, plus 39.2% of the excess
of such amount over $2,000,000
Over $2,500,000 but not over
$3,000,000.
$820,640, plus 42.4% of the excess
of such amount over $2,500,000
Over $3,000,000 ............................
$1,032,640, plus 44% of the excess
of such amount over $3,000,000’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to estates of decedents dying, and
gifts made, after the date of the enactment of this Act.
SEC. 3. UNIFIED CREDIT INCREASED TO EQUIVALENT OF
$2,500,000 EXCLUSION; INFLATION ADJUST-
MENT OF UNIFIED CREDIT.
(a) INCREASE IN UNIFIED CREDIT.—
(1) IN
GENERAL.—Subsection (c) of section
2010 of the Internal Revenue Code of 1986 (relating
to applicable credit amount) is amended by striking
all that follows ‘‘were the applicable exclusion
amount’’ and inserting ‘‘. For purposes of the pre-
ceding sentence, the applicable exclusion amount is
$2,500,000.’’
(2) CONFORMING AMENDMENT.—Subparagraph
(A) of section 2057(a)(3) of such Code is amended
by striking ‘‘$625,000’’ and inserting ‘‘the excess of
the applicable exclusion amount (determined without
regard to this paragraph) over $675,000’’.
(b) INFLATION ADJUSTMENT.—Section 2010 of such
Code is amended by redesignating subsection (d) as sub-
section (e) and by inserting after subsection (c) the fol-
lowing new subsection:
‘‘(d) COST-OF-LIVING ADJUSTMENT.—In the case of
any decedent dying, and gift made, in a calendar year
after 2001, the $2,500,000 amount set forth in subsection
(c) shall be increased by an amount equal to—
‘‘(1) $2,500,000, multiplied by
‘‘(2) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year by sub-
stituting ‘calendar year 2000’ for ‘calendar year
1992’ in subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence
is not a multiple of $10,000, such amount shall be round-
ed to the nearest multiple of $10,000.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to estates of decedents dying, and
gifts made, after the date of the enactment of this Act.
Æ