Under the rules in effect at that time, an individual could leave behind more than $5 million (twice that amount for married couples) without triggering the estate tax.
Combined with data from the Center for Disease Control and Prevention (CDC), the IRS figures show that only 0.18 percent-just two-tenths of 1 percent-of deaths in the United States in 2013 resulted in federal estate tax liability. The most recent estate tax data from the IRS covers estates of those who died in 2013. Tax is Concentrated on the Wealthiest Estates These public investments make America a place where families can earn and sustain huge fortunes. The wealthiest families benefit the most from what the government provides: public investments such as roads that make commerce possible, public schools that provide a productive workforce, the stability provided by our legal system and armed forces, the protection of private property. In the end, the estate tax is about fairness. The estate tax is one key tool to moderate the accumulation of dynastic wealth and level the playing field between those who inherit wealth and those who depend primarily on earned income. Researchers estimate that differences in inheritances explain about 30 percent of the correlation between parent and child incomes-more than IQ, schooling and personality combined. Inheritances account for 40 percent of all wealth and 4 percent of annual household income. This report explains how the percentage of estates subject to the federal estate tax has dropped dramatically from 2.16 percent in 2000 to just 0.06 percent in 2018, a 34-fold decrease in 19 years. Further, lawmakers have done little to stop aggressive accounting schemes designed to avoid the estate tax altogether. Lawmakers have exacerbated this trend by dramatically cutting federal taxes on inherited wealth, most recently by doubling the estate tax exemption as part of the 2017 Tax Cuts and Jobs Act. One study estimated that the wealthiest 1 percent of Americans held 42 percent of the nation’s wealth in 2012, up from 28 percent in 1989. Read as PDF Why the Estate Tax Is Importantįor years, wealth and income inequality have been widening at a troubling pace.
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