ADDITIONAL REDUCTIONS OF ESTATE AND GIFT TAX RATES.

SEC. 511. ADDITIONAL REDUCTIONS OF ESTATE AND GIFT TAX RATES. (a) Maximum Rate of Tax Reduced to 50 Percent.—The table contained in section 2001(c)(1) is amended by striking the two highest brackets and inserting the following: “Over $2,500,000 $1,025,800, plus 50% of the excess over $2,500,000.”. (b) Repeal of Phaseout of Graduated Rates.—Subsection (c) of section 2001 is amended by striking paragraph (2), (c) Additional Reductions of Maximum Rate of Tax.—Subsection (c) of section 2001, as amended by subsection (b), is amended by adding at the end the following new paragraph: “(2) Phasedown of maximum rate of tax.— “(A) In general.—In the case of estates of decedents dying, and gifts made, in calendar years after 2002 and before 2010, the tentative tax under this subsection shall be determined by using a table prescribed by the Secretary (in lieu of using the table contained in paragraph (1)) which is the same as such table; except that— “(i) the maximum rate of tax for any calendar year shall be determined in the table under subparagraph (B), and “(ii) the brackets and the amounts setting forth the tax shall be adjusted to the extent necessary to reflect the adjustments under subparagraph (A). “(B) Maximum rate.— “In calendar year: The maximum rate is: 2003 49 percent 2004 48 percent 2005 47 percent 2006 46 percent 2007, 2008, and 2009 45 percent.”. (d) Maximum Gift Tax Rate Reduced to Maximum Individual Rate After 2009.—Subsection (a) of section 2502 (relating to rate of tax) is amended to read as follows: “(a) Computation of Tax.— “(1) In general.—The tax imposed by section 2501 for each calendar year shall be an amount equal to the excess of— “(A) a tentative tax, computed under paragraph (2), on the aggregate sum of the taxable gifts for such calendar year and for each of the preceding calendar periods, over “(B) a tentative tax, computed under paragraph (2), on the aggregate sum of the taxable gifts for each of the preceding calendar periods. “(2) Rate schedule.— “If the amount with respect to which the tentative tax to be computed is: The tentative tax is: Not over $10,000 18% of such amount. Over $10,000 but not over $20,000 $1,800, plus 20% of the excess over $10,000. Over $20,000 but not over $40,000 $3,800, plus 22% of the excess over $20,000. 115 STAT. 71 “If the amount with respect to which the tentative tax to be computed is: The tentative tax is: Over $40,000 but not over $60,000 $8,200, plus 24% of the excess over $40,000. Over $60,000 but not over $80,000 $13,000, plus 26% of the excess over $60,000. Over $80,000 but not over $100,000 $18,200, plus 28% of the excess over $80,000. Over $100,000 but not over $150,000 $23,800, plus 30% of the excess over $100,000. Over $150,000 but not over $250,000 $38,800, plus 32% of the excess over $150,000. Over $250,000 but not over $500,000 $70,800, plus 34% of the excess over $250,000. Over $500,000 $155,800, plus 35% of the excess over $500,000.”. (e) Treatment of Certain Transfers in Trust.—Section 2511 (relating to transfers in general) is amended by adding at the end the following new subsection: “(c) Treatment of Certain Transfers in Trust.—Notwithstanding any other provision of this section and except as provided in regulations, a transfer in trust shall be treated as a taxable gift under section 2503, unless the trust is treated as wholly owned by the donor or the donor’s spouse under subpart E of part I of subchapter J of chapter 1.“. (f) Effective Dates.— (1) Subsections (a) and (b).—The amendments made by subsections (a) and (b) shall apply to estates of decedents dying, and gifts made, after December 31, 2001. (2) Subsection (c).—The amendment made by subsection (c) shall apply to estates of decedents dying, and gifts made, after December 31, 2002. (3) Subsections (d) and (e).—The amendments made by subsections (d) and (e) shall apply to gifts made after December 31, 2009.