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Highlights of the Financial Freedom Act of
1999
Tax Cuts for America’s Workers…
- 10-percent Across-the-Board Cut in Tax Rates: Reductions
in individual income rates will be gradually phased-in beginning
in 2001; the 10-percent cut will be fully effective in 2009.
- Marriage Penalty Relief:
Beginning in 2000, proposed
changes in the tax law will reduce the "penalty" paid by married
couples filing joint returns.
- Relief and Repeal of the Individual Alternative Minimum Tax:
Temporary provisions that allow nonrefundable personal credits
to offset AMT are made permanent and, beginning in 2003, the
individual AMT is gradually reduced until is it fully repealed in
2008.
- Additional Capital Gains Relief:
effective July 1, 1999,
the maximum tax rate on capital gains is reduced to 15 percent and
the minimum rate is reduced to 7.5 percent.
- Education Tax Incentives:
Beginning in 2001, new rules on
education savings accounts and prepaid tuition plans will allow
more taxpayers to take advantage of these incentives.
- Exclusion for Savings and Investment Income:
Beginning in
2001, taxpayers can exclude a portion of their savings and
investment income, up to a maximum of $400 in 2003.
…and the Companies They Work For.
- Extension of the R&D Tax Credit: The tax credit for
incremental research and development performed by companies is
extended for five years — through June 30, 2004, retroactive to
July 1, 1999. The proposal includes an increase in the alternative
incremental research credit (AIRC) rates, which will provide
greater parity for companies that do not qualify for the regular
credit.
- Relief and Repeal of the Corporate Alternative Minimum Tax:
Beginning in 2003, companies can better utilize their
accumulated AMT credits and the corporate AMT is totally repealed
by 2008.
- Death Tax Repeal
: The estate tax burden will be lowered
beginning in 2001 when the current unified credit is replaced with
an exemption and gradual cutbacks in the estate, gift and
generation-skipping tax rates go into effect. The death tax is
eliminated by 2009.
- Tax Rate Cuts for S-corporations:
Beginning in 2001,
income tax rates are gradually reduced by 10 percent for
businesses like S corporations and partnerships that are taxed
at individual rates.
- International Tax Relief:
A package of several provisions
helps level the global playing field for U.S.-based multinational
corporations. Specific provisions repeal the limit on foreign
sales corporation benefits for defense exports, accelerate the
look-through rules for dividends from 10/50 corporations, repeal
foreign tax credit limitations on AMT companies, ensure the
confidentiality of advance pricing agreements and allow interest
allocation on a worldwide basis.
- Corporate Capital Gains:
beginning in 2000, the top
capital gains tax rate for corporations is gradually reduced to a
maximum rate of 25% by 2010.
- Pension Reforms:
Generally effective in 2001, a package of
reforms will expand pension coverage by increasing contribution
and benefit limits, increasing portability and modifying the
top-heavy rules, eliminating user fees and reducing federal
pension premiums on small firms. |
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