Estate Tax

Berkley Estate Tax Bill Would Add Billions to Deficit While Benefiting Only Wealthiest 1 in 500 Estates

“A new estate tax bill [H.R. 3905] introduced by Representative Shelley Berkley (D-NV) and others would cost $119 billion more over the first decade (2012-2021) than extending the tax under its current rules…yet would benefit only the nation’s wealthiest 0.2 percent of estates since they are the only ones subject to the tax under the current rules….

“[I]t is imperative that the permanent estate tax solution be fiscally responsible and fit the economic and budgetary challenges the nation faces today, as well as the even more daunting fiscal challenges it will encounter in the decades ahead.  H.R. 3905 fails these tests.”  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, which is scheduled to disappear entirely 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.