President Bush has signed into law a $1.35-trillion tax bill that will phase out the inheritance tax by 2010. The House and Senate approved the measure May 26.
At a White House signing ceremony on June 7, Bush noted how quickly Congress worked to pass the legislation that he championed during his campaign. "A year ago, tax relief was said to be a political impossibility. Six months ago, it was supposed to be a political liability. Today, it becomes a reality," he said.
The bill also reduces individual income tax rates and creates a new 10% tax rate. It includes breaks for small businesses and boosts incentives for savings.
Elimination of the estate tax is a big win for many construction groups that made the provision a top priority. The new law calls for the amount of an estate that is exempt from the tax to rise to $1 million in 2002 from the current $675,000. That excluded amount will climb to $1.5 million in 2004 , to $2 million in 2006 and to $3.5 million in 2009. The topestate tax rate also will drop from the current 55%, to 50% in 2002 and then decrease gradually to 45% by 2007.
But to keep the cost of the overall package within previously agreed budget constraints, all of the cuts included in the measure will expire on Dec. 31, 2010, unless another president or Congress extends them. A bill already is under consideration in the House to do just that.