Estate Tax

State-by-State Data Show Stark Contrast Between Estate Tax Cut Extension and Lapse in Tax Credit Improvements for Working Families

In recent proposals to extend expiring tax cuts beyond the end of the year, Republican leaders in the House and Senate have called for extending an estate tax cut enacted in 2010 that provides a large tax break to the estates of the wealthiest 0.3 percent of Americans who die each year — about 7,000 people — while ending a provision of the same 2010 tax legislation that makes improvements in the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) that benefit 13 million moderate-income working families. Read more

 

Senate and House GOP Leaders' Tax Proposals Would Provide Windfall for Heirs of Largest Estates
But Would Let Child Tax Credit and Earned Income Tax Credit Improvements for 13 Million Working Families Expire

Senate and House Republican leaders are proposing to provide extremely large tax breaks averaging over $1 million per estate to the heirs of the biggest 0.3 percent of estates — that is, to the heirs of the richest three of every 1,000 people who die. Yet while conferring very large tax breaks on the estates of America’s wealthiest people, the Senate and House Republican proposals fail to extend provisions of the same 2010 legislation that extended improvements in tax credits for millions of low- and moderate-income working families and substantial numbers of modest-income college students. Read more

Background

Enacted in 1916, the estate tax is a tax on property (such as cash, real estate, stock, or other assets) that is transferred from deceased persons to their heirs.  It is best understood as a tax on inherited wealth because it applies only to large transfers of property. 

The 2001 tax law gradually phased out the tax, culminating in complete repeal of the tax in 2010.  But the 2001 law is set to expire at the end of 2010, meaning that the estate tax will return in 2011 in its 2001 form unless Congress acts.  While few in Congress favor a return to the 2001 version of the tax, Congress has yet to agree on what reform of the tax would be appropriate.

By the Numbers

Graphic: Only a tiny fraction of estates from deaths in 2009 will owe any estate tax
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