Bill Overview
Title: Family Attribution Modernization Act
Description: This bill modifies family attribution rules for purposes of tax-exempt pension and profit sharing plans (e.g., 401k retirement plans) to provide that (1) community property laws shall be disregarded for purposes of determining ownership under attribution rules, and (2) attribution is eliminated for spouses and minor children under certain circumstances. The family attribution rule treats an individual taxpayer as owning property interests (e.g., stock) that are owned, directly or indirectly, by the individual's spouse, children, grandchildren, and parents.
Sponsors: Sen. Kelly, Mark [D-AZ]
Target Audience
Population: People with pensions and profit-sharing plans affected by family attribution rules
Estimated Size: 35000000
- The bill affects tax-exempt pension and profit-sharing plans, such as 401k plans, which are common worldwide but particularly prevalent in the US.
- Community property laws affect how property is divided and owned, and these laws are specifically relevant in the context of several US states.
- Family attribution impacts tax liability and retirement planning for individuals who have family members owning shares or interests in a business.
- By changing attribution rules for spouses and minor children, this could impact married individuals and families with minor children involved in business operations.
Reasoning
- The policy targets individuals impacted by family attribution rules, with a focus on tax-exempt pension and profit-sharing plans, specifically 401k plans.
- The target estimate suggests 35 million people within the US are directly affected by these rules under current laws.
- The policy modifies attribution rules, which could affect tax liabilities for families with business interests, particularly in states with community property laws.
- Budget constraints necessitate the policy primarily benefits individuals with significant business interests or pension plans subject to current attribution rules. The policy needs to have a measurable impact on equitable taxation and retirement planning.
Simulated Interviews
Small Business Owner (California)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- As someone running a business with my husband, the family attribution rule complicates our tax planning.
- It's often a balancing act dealing with these rules, so simplifying them would help a lot.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Accountant (Texas)
Age: 54 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- As an accountant, understanding the implications on some of my clients is key.
- The alteration in rules could simplify financial reporting, which can be quite taxing under current regulations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Corporate Lawyer (New York)
Age: 34 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- While I don't have personal impacts from attribution laws, the majority of my work revolves around navigating these for clients.
- The policy could streamline some legal processes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 6 | 7 |
| Year 20 | 6 | 7 |
Tech Employee (Washington)
Age: 30 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 0.5 years
Commonness: 10/20
Statement of Opinion:
- For employees like me, the policy's effects are indirect but may impact retirement strategies.
- My 401k isn't directly impacted, but clarity in laws is generally beneficial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Retired (Florida)
Age: 63 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- Most of my income attribution rules while actively managing our family's properties would've been simpler if such changes were in place.
- The policy reflects a potential reduction in complexity for my heirs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 6 | 8 |
Professor (Oregon)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- This policy can serve as an interesting case study about how attribution rules impact economic behavior.
- I think the simplification is good, but the real-world impact might take time to realize.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Small Business Consultant (Utah)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- Clients often struggle with the nuances of family attribution in business taxes.
- Changes make consulting easier and more efficient, aligning with client interests.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 7 | 6 |
Entrepreneur (Nevada)
Age: 38 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- Managing a business as a family requires understanding complex tax laws.
- This policy could alleviate some of the tax burden and make compliances easier.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Financial Advisor (Massachusetts)
Age: 46 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 8.0 years
Commonness: 7/20
Statement of Opinion:
- The policy could influence retirement planning advice I give, specifically for clients in family businesses.
- Simplification is generally positive, pending final implementation details.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 6 | 6 |
Self-Employed, Freelance Writer (Arizona)
Age: 55 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 7.0 years
Commonness: 6/20
Statement of Opinion:
- My financial predictions for these new adjustments are cautiously optimistic.
- Writing about it certainly increases interest among my readers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $15000000 (Low: $10000000, High: $25000000)
Year 2: $15000000 (Low: $10000000, High: $25000000)
Year 3: $15000000 (Low: $10000000, High: $25000000)
Year 5: $15000000 (Low: $10000000, High: $25000000)
Year 10: $15000000 (Low: $10000000, High: $25000000)
Year 100: $15000000 (Low: $10000000, High: $25000000)
Key Considerations
- The modification of family attribution rules will affect tax-exempt pension plans and profit-sharing plans, impacting families involved in businesses.
- Community property laws vary across states, leading to divergent impacts and compliance requirements.
- Government may need to monitor shifted burdens in states with community property laws for potential unintended outcomes.