Monday, June 14, 2010
THE CASE AGAINST LYNN JENKINS CHAPTER 8 - SHE'S A "NO-GO" ON PAYGO & VOTES TO KEEP TAXING ESTATES!
This is Lynn Jenkins, she does not represent us.
If you weren't paying attention, and most of America was not, you'd look at the roll calls and bill summary and status of H.R. 3961, the MEDICARE PHYSICIAN PAYMENT REFORM Act of 2009 and think that this important component of Health Care Reform had passed both houses of the Congress and became Public Law 111-141.
Not so fast, things aren't what they appear to be. The House did pass H.R. 3961. It was a bill about updating the way physicians are compensated for their services under Medicare.
The Senate amended the bill. They took everything out of the bill following the enactment clause, which is boilerplate preamble language for every bill. What they replaced it with had diddly to do with Health Care Reform in any way fashion or form.
The Senate transformed this bill from modernizing the manner of physician payment to expanding the sunset provisions of the PATRIOT Act and the INTELLIGENCE REFORM & TERRORISM PREVENTION Act.
When this was a bill about how we pay doctors for Medicare Lynn Jenkins voted no. That was roll call 909 where the vote was 243 to 183. Only one Republican voted with the majority. When the bill was about extending sunset provisions for the PATRIOT Act and the INTELLIGENCE REFORM & TERRORISM PREVENTION Act. then she was for it. That was roll call 67 in the second session of the 111th Congress. Thus far all roll call votes have been numbered in the first session. On roll call 67 the bill passed 315 to 97.
The bill Lynn Jenkins voted against was intended to reestablish a statutory procedure to enforce a rule of budget neutrality on new revenue and direct spending legislation. This was a Pay-As-You-Go bill. Lynn Jenkins voted not to pay for the spending the Congress is proposing!
Shattering the propaganda that Republicans are for lower taxes was the vote on H.R. 4154 the PERMANENT ESTATE TAX RELIEF FOR FAMILIES, FARMERS, & SMALL BUSINESSES Act of 2009. On a vote of 229 to 200 the measure passed the House.
If you're not fluent in the Tax Code this legislation will be as clear as mud! So to clear the mud here are a couple of definitions. "Basis," for tax purposes means the purchase price of the property plus the value of certain improvements. For real estate it is the purchase price plus the added value from improvements, like a kitchen remodel or a new roof. Note, that is not the cost, but the value of those improvements. For stocks and bonds, it's just the purchase price.
A "Step Up in Basis" means that the purchase price is taken out of the equation and the property's stepped up basis is the value of the property as of the decedent's date of death. If Farmer Jones purchased the farm in 1960 for $200,000 and made no improvements then his basis was $200,000. If on May 1st of this year he dies and the farm goes to his heirs, the step up basis will be what the farm was valued at on May 1st. So if the farm is now worth $1,000,000. The step up basis is $1,000,000.
Under the law which went into effect in January heirs did not receive the full step up basis, but rather a "Modified Carryover Basis" Now the heirs get the original basis and not the step up basis. So if Farmer Jones died on May 1st the modified carryover basis is $200,000 and not $1,000,000. This is real important when it comes to calculating capital gain taxes. If the property sells for $1,000,000 then the capital gains are calculated on the difference between the sales price and the modified carryover basis, which is $800,000 of capital gain. If the step up basis was used, as before January 1, 2010 then the sale of the farm for $1,000,000 minus the step up basis of $1,000,000 leaves a capital gain of zero.
Getting back to zero capital gains for the estate of Farmer Jones was the purpose behind H.R. 4154. Lynn Jenkins is a C.P.A. so you have to know that she understood this bill without any problem. Her problem is that she voted to keep, not eliminate the tax on Farmer Jones' Estate! We need to eliminate Lynn Jenkins at the ballot box.
Note: You should always seek competent advice from a professional tax expert in making important decisions with tax consequences.