Estate Tax Archive
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Myths and Realities about the Estate Tax
Revised April 16, 2013
The estate tax is a tax on property (cash, real estate, stock, or other assets) transferred from deceased persons to their heirs. Only the wealthiest estates in the country pay the tax because it is levied only on the portion of an estate’s value that exceeds a specified exemption level, currently $5.25 million per person … -
President Obama’s Deficit-Reduction Package and Other Proposals in the 2014 Budget
April 11, 2013
The President’s 2014 budget is presented in two parts. One part includes the package of deficit- reduction policies that the President included in his last offer to Speaker Boehner during the “fiscal cliff” negotiations in December 2012. This package would reduce the deficit by $1.8 trillion over the next decade … -
State Taxes on Inherited Wealth Remain Common:
Updated March 12, 2013
Taxes on inherited wealth are a traditional and common revenue source for states. Prior to the passage of the federal estate tax cut in 2001, every state levied an estate tax that allowed them to “pick up” a share of federal estate tax revenues. The state “pick-up” estate taxes did not increase total estate … -
Achieving Further Deficit Reduction Solely Through Spending Cuts Entails Cutting Entitlements That Benefit the Poor and Middle Class While Shielding the Biggest Entitlements for the Wealthy
January 9, 2013
Since President Obama and Congress enacted the “fiscal cliff” budget deal, congressional Republican leaders have vowed not to raise a dollar more in taxes for deficit reduction. All further deficit reduction, they say, must come from budget cuts, primarily from entitlement programs. That, however, would spare the broad … -
Commentary: Next Round on the Deficit
January 7, 2013
In recent days, policymakers, pundits, and the media have debated whether the “fiscal cliff” budget deal was a victory or defeat for the President or congressional Republicans, progressives or conservatives, rich or poor, the economy or the deficit — you name it. Most of the commentary is unpersuasive, however, for … -
Budget Deal Makes Permanent 82 Percent of President Bush’s Tax Cuts
January 3, 2013
The American Taxpayer Relief Act of 2012 (ATRA)[1] , which President Obama signed into law last night, makes permanent 82 percent of President Bush’s tax cuts. The Joint Committee on Taxation (JCT) and Congressional Budget Office estimate that making permanent all of the Bush tax cuts would have cost $3.4 trillion over 2013-2022.[2] … -
Correcting Misunderstandings About Obama’s Latest Tax Offer Vs. Boehner’s “Plan B”
December 20, 2012
On the tax side of the “fiscal cliff” talks between President Obama and House Speaker John Boehner, the differences between Obama’s latest offer and Boehner’s “Plan B” proposal are far greater than much of the news coverage has suggested. The same holds true for the differences between … -
Policy Basics: The Estate Tax
Updated December 14, 2012
A long-standing part of the tax system, the estate tax is a tax on property (cash, real estate, stock, or other assets) transferred from deceased persons to their heirs. It is levied not on the full estate but rather on the portion of the estate’s value that exceeds a specified amount … -
Statement of Robert Greenstein, President, in Response to Republican Budget Offer
December 4, 2012
House Republican leaders portray the deficit-reduction offer that they issued yesterday as a fair middle ground. It isn’t. On the crucial issue of revenues, the new Republican offer proposes $800 billion over ten years. Contrast that with the plan that Erskine Bowles, Alan Simpson, and some members of their commission issued in December 2010, … -
State-Level Estimates Show Stark Contrasts Under Proposals To Extend Cut in Estate Tax While Failing to Extend Improvements in Tax Credits For Working Families
October 15, 2012
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 … -
Chart Book: 10 Things You Need to Know About the Capital Gains Tax
Revised September 20, 2012
1. Capital gains tax rates are the lowest since the Great Depression. The capital gains tax rate on assets that have been held for more than one year is 15 percent for people above the 15 percent income tax bracket. (People in or below the 15 percent bracket owe no capital gains tax.) This is far below the top marginal tax rate on ordinary income — currently … -
Senate and House GOP Leaders' Tax Proposals Would Provide Windfall for Heirs of Largest Estates
Revised July 24, 2012
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. The Senate and House leadership proposals each would do so by extending the … -
Blog Post: Greenstein on the Ryan Budget
March 21, 2012
We’ve issued a statement from Robert Greenstein on the budget from House Budget Committee Chairman Paul Ryan. Here’s the opening: The new Ryan budget is a remarkable document — one that, for most of the past half-century, would have been outside the bounds of mainstream discussion due to its extreme nature. In essence, this budget is … -
Statement of Robert Greenstein, President, on Chairman Ryan's Budget Plan
March 21, 2012
The new Ryan budget is a remarkable document — one that, for most of the past half-century, would have been outside the bounds of mainstream discussion due to its extreme nature. In essence, this budget is Robin Hood in reverse — on steroids. It would likely produce the largest redistribution of income from the bottom to the top in modern U.S.… -
Can Governor Romney’s Tax Plan Meet Its Stated Revenue, Deficit, and Distributional Goals at the Same Time?
March 2, 2012
Unveiling his tax plan on February 22, Governor Romney's campaign said it would: 1) make permanent President Bush's tax cuts (but not those enacted under President Obama, which are scheduled to expire at the same time and which expanded several refundable tax credits for low- and middle-income families); 2) then cut individual … -
New Estate Tax Rules Should Expire After 2012
May 26, 2011
The tax-cut compromise enacted in December established estate tax rules for 2011 and 2012 that are considerably weaker than those in effect in 2009, the last year before the tax temporarily expired in 2010. The new rules will cost about $23 billion more than reinstating the 2009 rules over the same two years, yet will benefit … -
Statement by Robert Greenstein on Senate Republican Leaders’ Proposed Balanced Budget Amendment
March 31, 2011
The balanced budget amendment to the Constitution that Senate Republican leaders unveiled today is the most radical major fiscal policy proposal in decades. It would require a balanced budget every year regardless of the state of the economy, an exceedingly unwise requirement that most … -
Zandi Analyses Show "Democratic" Measures in Tax Cut-UI Deal Boost Economy, "Republican" Measures Add to Deficit Risks
December 22, 2010
As a result of the tax cut-unemployment insurance legislation that President Obama signed into law last week, economic forecasters have substantially upgraded their outlook for 2011 (see the box on page 2). An analysis of the compromise by Mark Zandi, the chief economist for Moody’s Analytics, indicates that this greater optimism stems … -
Unpacking the Tax Cut-Unemployment Compromise
December 10, 2010
Last night, the Senate released legislative language for the tax cut-unemployment insurance compromise negotiated between President Obama and Congressional Republicans. The Joint Committee on Taxation (JCT) released an official cost estimate for the revenue portions of the bill shortly thereafter. These graphs illustrate the various components … -
Statement: Robert Greenstein, Executive Director, on the Tax Cut-Unemployment Insurance Deal
Updated December 8, 2010
The deal between President Obama and Republican leaders on tax cuts and unemployment insurance has two substantial positive aspects: its surprisingly strong protections for low- and middle-income working families and its stronger-than-expected boost for the economy and jobs. But it … -
Podcast: Next Steps on the Estate Tax
September 7, 2010
Chuck Marr, the Center’s Director of Federal Tax Policy, discusses the current status of the estate tax.
Duration: 3:56
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Unlimited Estate Tax Exemption For Farm Estates Is Unnecessary and Likely Harmful
June 29, 2010
Proponents of repealing the estate tax have made farmers, along with small business, the face of their cause, driving some policymakers to push for special preferences for farms in estate tax law. One of the most radical of these proposed changes is an unlimited estate tax exemption for farmland, recently introduced by Rep. Mike Thompson … -
Stalled Proposal to Cut Estate Tax Further Is Deeply Flawed and Should Not Be Revived
Revised May 21, 2010
A proposal that several senators were developing — before negotiations stalled this week — to cut the estate tax beyond the generous parameters in place in 2009 was deeply flawed, relying on two budget gimmicks to mask its unaffordable cost. “The details [of the proposal] are pretty well resolved,” the leading … -
Stalled Estate Tax Proposal Could Threaten State Revenues that Support Education, Public Safety, and Other Key Services
May 20, 2010
A provision that several senators were reportedly considering for a now-stalled estate tax proposal could squeeze state revenues that support education, public safety, and other vital services to help cut taxes on the estates of the wealthiest one-quarter of 1 percent of Americans. The proposal, which several Senators (including Jon Kyl, Max … -
Contrary to Claims, Allowing Estate Tax to Expire Would Make Family Farms and Small Businesses Worse off Overall
December 17, 2009
While estate-tax opponents have held up family-owned farms and small businesses as “poster children” for the benefits of repealing the tax, such estates would be worse off, on balance, if Congress allows estate tax repeal and related tax changes to take effect on January 1, as now seems likely. The estate tax is irrelevant to the … -
Statement: Chuck Marr, Director of Federal Tax Policy, on the Senate Debate on the Federal Estate Tax
December 16, 2009
Today’s Senate debate over whether to extend the federal estate tax or let it expire for next year is a study in irony. Under current law, the estate tax, which has been reduced very significantly since 2001 and now only affects the biggest 1 of every 500 estates in America, will expire next … -
Statement: Chuck Marr, Director of Federal Tax Policy, on House Consideration of the Estate Tax
December 3, 2009
In recent years Congress has greatly reduced the federal estate tax, which affects only the nation’s very largest estates, and the House should reject any effort this week to reduce it beyond its current parameters. The country is suffering from the worst economic crisis since the Great Depression, with more than one in ten … -
Congress Should Not Weaken the Estate Tax Beyond 2009 Parameters
December 2, 2009
The House of Representatives this week is expected to consider permanently extending the current estate tax, under which only 1 in 500 estates face the tax and those that do pay, on average, an effective rate of less than 20 percent. The House will vote on the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act … -
Berkley Estate Tax Bill Would Add Billions to Deficit While Benefiting Only Wealthiest 1 in 500 Estates
Revised November 9, 2009
A new estate tax bill introduced by Representative Shelley Berkley (D-NV) and others would cost $91 billion more over the first decade (2012-2021) than extending the tax under its current rules as the President has proposed, yet would benefit only the nation’s wealthiest 0.2 percent of estates since they are the only ones … -
Podcast: The Estate Tax
July 14, 2009
Director of Federal Tax Policy, Chuck Marr, discusses the basics of the estate tax and the debate about it in Congress.
Duration: 5:04
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Reports Calling for Estate Tax Repeal Seriously Flawed
July 7, 2009
Despite questionable reports to the contrary, repealing the estate tax would weaken the economy by adding nearly $800 billion to budget deficits over 10 years, thus reducing national saving and leaving fewer funds for investment that leads to higher productivity in the long run. Two recent reports from the American Family Business … -
The Senate and the Estate Tax: Cutting Through the Fog
April 16, 2009
View more up to date information about the estate tax:: Policy Basics: The Estate Tax June 14, 2010 Earlier this month, the Senate voted on an amendment to the budget resolution, offered by Senators Jon Kyl and Blanche Lincoln, to shrink the estate tax in various ways. A number of major newspapers, including the New York Times and Washington … -
Huffington Post Op-Ed: Senate to Uber-Rich: “Help Is on the Way”
April 13, 2009
"...Is this the time to spend about $90 billion over the next decade to give the nation's wealthiest households a new, multi-million-dollar tax cut? The U.S. Senate apparently thinks so." Read more -
Lincoln-Kyl Estate Tax Amendment is Both Unnecessary and Unaffordable
Revised April 10, 2009
On April 2 the Senate narrowly adopted (by a 51-48 vote) an amendment to the budget resolution by Senators Blanche Lincoln and Jon Kyl that would substantially weaken the estate tax. This proposal is both fiscally irresponsible — it would pave the way for a significant increase in … -
Congress Should Not Weaken Estate Tax Beyond 2009 Parameters
Revised March 11, 2009
The Administration’s recently-released budget proposes to make permanent key features of the estate tax that are in place in 2009. This will launch a major congressional debate. Under current law, the tax has been phasing down for several years and is scheduled to end entirely in 2010, only to return in 2011 under the parameters that were in place in … -
Impact of Estate Tax on Small Businesses and Farms Is Minimal
February 23, 2009
Congress is expected to debate permanent changes in the estate tax in coming months. A key issue in that policy debate is likely to be the effect of the estate tax on estates containing small businesses and family-owned farms.[1] Some proponents of repealing or weakening the estate tax beyond its current form claim that doing is so is necessary because of the impact of the tax on small business and … -
Slideshow: The Estate Tax
Updated February 23, 2009
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Big Misconceptions about Small Businesses and Taxes
Updated February 2, 2009
Supporters of various tax benefits for high-income households often claim that failure to maintain them would have an undue effect on many small businesses. But even assuming a broad definition of “small business,” such claims are often exaggerated or false. This paper examines three such claims. First, critics … -
Proponents of Estate Tax Repeal Resurrecting Old Misconceptions
February 2, 2009
With Congress expected to debate permanent changes in the estate tax in coming months, some proponents of repealing the tax or weakening it beyond its current form are resurrecting old misconceptions about the tax. For example, a recent Wall Street Journal editorial claimed that repealing the estate tax would increase national saving and that U.S. estate taxes are high … -
The High Cost of Estate Tax Repeal
Revised January 28, 2009
View more up-to-date data: Policy Basics: The Estate Tax June 14, 2010 Making permanent the repeal of the estate tax after 2010 — repeatedly proposed by President Bush— would add almost $1.3 trillion to the deficit between fiscal years 2012 and 2021, the first ten years in which the full costs of extending repeal would be reflected in … -
Evidence Shows That Tax Cuts Lose Revenue
Revised July 21, 2008
The claim that tax cuts “pay for themselves” — i.e., cause so much economic growth that revenues rise faster than they would have without the tax cut — has been made repeatedly in recent years and is one of the many tax policy issues that is likely to receive renewed attention in light of the upcoming … -
Kyl Estate Tax Amendment Would Cost Nearly As Much As Estate Tax Repeal
March 12, 2008
Permanent repeal of the estate tax would reduce revenues by almost $1 trillion between 2012 and 2021, the first ten-year period in which its costs would be fully felt. With the economy slowing and deficits returning — and with far larger deficits projected for future years — there is increasing recognition that … -
The Dubious Priorities of the President's FY 2009 Budget
Revised February 7, 2008
The President’s budget would provide more tax cuts heavily skewed to the most well-off while cutting vital services for low- and moderate-income Americans, generating large deficits, and increasing the strain on states already confronting budget problems as a result of the economic downturn. The budget … -
An Unlimited Estate Tax Exemption For Farmland Unnecessary, Open to Abuse, and Likely to Hurt, Rather than Help, Family Farmers
October 1, 2007
There is overwhelming evidence that the estate tax has never posed a significant problem for farmers. According to the Congressional Budget Office, only 1,659 farmers nationwide owed any estate tax in 2000, when the estate tax exemption stood at just one-third of its current level.[1] Some 1,521 of these estates — or 92 percent of them — had liquid assets that exceeded … -
Research Findings Cast Doubt on Argument That Estate Taxes Harm State Economies
January 9, 2007
In June 2001, President Bush signed federal legislation to phase out the federal estate tax. This legislation repeals the federal estate tax by 2010 and also effectively repealed by 2005 the state “pickup” taxes through which states share in federal estate tax collections. States can prevent this loss of revenue by … -
Combined Effect of Senate Proposals Would Be To Finance Near-Repeal of the Estate Tax with Cuts in Medicare, Veterans Benefits, School Lunches, and Other Programs
August 9, 2006
At the urging of Senate Republican leader Bill Frist, the Senate last week considered a House-passed proposal to repeal most but not all of the estate tax. The measure contains no “offsets”; its large cost would be financed through higher deficits. In June, the Senate Budget Committee approved a far-reaching bill to make major changes in … -
Comparing the House Minimum Wage and Estate Tax Proposals
Revised August 3, 2006
House leaders are following a legislative strategy that involves marrying an increase in the minimum wage to a sharp reduction in the estate tax. This approach juxtaposes policies that are aimed at two groups at opposite ends of the economic spectrum: minimum-wage workers for whom full-time work currently pays $10,700 a year, and individuals who … -
House Estate Tax Proposal Has Essentially the Same Large Long-Term Cost As Earlier Version
July 28, 2006
Just five weeks after passing legislation that would drastically reduce the estate tax (H.R. 5638), the House of Representatives is considering another estate-tax proposal. The House passed H.R. 5638 in the hope that it would attract the needed 60 votes in the Senate, but Senators who oppose repealing most or all of the estate tax did not embrace the House alternative, … -
Combined Effect of Bills Moving in the Senate Would Be To Finance Near-Repeal of the Estate Tax With Cuts in Medicare, Veterans Benefits, School Lunches, and Other Programs
June 26, 2006
At the urging of Senate Republican leader Bill Frist, the House of Representatives last week approved a measure designed by House Ways and Means Committee chairman Bill Thomas to repeal most but not all of the estate tax. The measure contains no “offsets”; its large cost would be financed through higher deficits.… -
Estate Tax "Compromise" Proposals May Endanger State Estate and Inheritance Taxes
Revised June 23, 2006
On June 22, the House of Representatives approved an estate tax proposal introduced by House Ways and Means Chairman Bill Thomas. While supporters of the proposal describe it as a “compromise,” it would in fact eliminate the vast bulk of estate tax revenue and has been more aptly characterized as “near repeal.… -
High Cost of Thomas Proposal Reflects the Low Effective Tax Rates Estates Would Face Proposal’s Benefits Would Go Primarily to Largest Estates
Revised June 23, 2006
On June 22, the House passed legislation to sharply reduce the estate tax, and the Senate may vote on the legislation next week. Introduced by House Ways and Means Committee Chairman Bill Thomas, the measure would exempt the first $10 million of an estate for a couple ($5 million for an individual) and would index this exemption for inflation after 2010.… -
Thomas Estate Tax Proposal Still "Near Repeal"
Revised June 23, 2006
On June 22, the House of Representatives passed estate-tax legislation (H.R. 5638), introduced by House Ways and Means Chairman Bill Thomas, that is very similar to — and even slightly more costly than — the most recent estate-tax proposal floated by Senator Jon Kyl. Both proposals would cost nearly as much as permanent repeal of the … -
New Estate Tax Anecdotes Dredge Up Old Myth That the Estate Tax Claims Half of an Estate
June 14, 2006
Opponents of the estate tax often claim that it forces estates to pay half of their assets in taxes. For example, during the Senate debate on the estate tax earlier this month, Senator Jon Kyl told the story of a businessman whose family allegedly had to pay “half of the value of [his] company to the government.” Senator Kyl went so far … -
New Joint Tax Committee Estimates Show Modified Kyl Proposal Still Very Costly
Revised June 13, 2006
On June 8, the Senate rejected, by a vote of 57-41, a motion to consider permanent repeal of the estate tax (under Senate rules, the measure required 60 votes to pass). During the lead-up to the vote, Senator Jon Kyl floated a modification of his longstanding “compromise” proposal to repeal most but not quite all of the estate tax. … -
Cost of Estate Tax Compliance Does Not Approach the Total Level of Estate Tax Revenue
Revised June 9, 2006
It has been claimed that the costs of complying with the estate tax are nearly equal to the total amount of revenue the tax raises. While it is true that wealthy people devote considerable time and money to sheltering their estates from taxation, there is no credible evidence that compliance costs — including the … -
New Joint Committee on Taxation Estimates of Estate Tax Repeal Show Slightly Higher Costs
June 9, 2006
The Joint Committee on Taxation this week released new estimates of the cost of making permanent the repeal of the estate tax after 2010. These estimates of the cost of H.R. 8, the measure that passed the House last year (and that the Senate voted on June 8 not to consider), show that permanent repeal would cost $386.5 billion between 2007 and 2016.… -
Estate Tax Repeal Would Decrease National Saving
June 8, 2006
Repeal of the estate tax would add about $1 trillion to federal deficits over the first decade in which its costs would be fully felt (2012-2021). These higher deficits would reduce national savings, with the consequence that, in the long run, estate tax repeal would have at best negligible, and possibly negative, effects on the economy. Surprisingly, … -
Estate Tax Repeal — or Slashing The Estate Tax Rate — Would Substantially Reduce Charitable Giving
June 7, 2006
Repealing the estate tax would substantially reduce U.S. charitable giving, according to research by the Congressional Budget Office and various economists. As CBO’s study explains, the estate tax creates powerful incentives for affluent individuals to donate to charity. Since donations made both during life and at death reduce the size of an estate and thus the amount subject … -
Estate Tax "Compromise" With 15 Percent Rate Is Little Different Than Permanent Repeal
Revised June 2, 2006
The Senate is expected to vote on estate tax repeal in June of this year. Permanent repeal of the estate tax would cost nearly $1 trillion between 2012 and 2021, the first ten year period in which its costs would be fully felt. (This cost includes $776 billion in revenue loss and $213 billion in higher interest payments on the federal debt.[1]) In … -
The State of the Estate Tax as of 2006
Revised June 2, 2006
With the Senate preparing to vote on permanent repeal of the estate tax in June, it is important to take stock of the changes that have already been made to the tax. As a result of legislation enacted in 2001, the portion of an estate that is exempt from taxation has more than doubled since 2000 and stands at $2 million ($4 million per couple) in 2006.… -
An Estate Tax with a 15 Percent Tax Rate Does Not Represent a Reasonable Compromise
September 22, 2005
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Greenspan Rejects Estate Tax Repeal without Offsets
July 22, 2005
In testimony before the Senate Banking, Housing and Urban Affairs Committee on July 21, Federal Reserve Chairman Alan Greenspan reiterated his opposition to tax-cut proposals that increase the deficit and made clear that this opposition applies to proposals that repeal or drastically reduce the estate tax without fully offsetting the costs. With the reappearance of high … -
CBO Finds Tiny Number of Farms Face Estate Tax
July 11, 2005
A new report by the Congressional Budget Office (CBO)[1] lays to rest the myth that the estate tax imposes a significant burden on America’s farmers and forces many of them to sell their farms to pay the tax. In a thorough analysis of IRS data, CBO finds that with the amount of an estate that is exempt from the estate … -
Deficits Frame Coming Debate on Estate Tax
July 8, 2005
Later this summer, the Senate is expected to vote on the fate of the estate tax. While this will not be the first time that lawmakers have expressed their views on whether the tax should be repealed, the upcoming vote will occur in a sharply different fiscal context than earlier votes. As Senator Ron Wyden (D-Ore.), who has … -
Estate Tax Reform Could Raise Much-Needed Revenue: Some Reform Options with Low Tax Rates Raise Very Little Revenue
Revised March 16, 2005
Under current law, the estate tax will be repealed in 2010, and then will be reinstated in 2011. This strange sequence of events will occur because the tax cuts enacted in 2001, including those related to the estate tax, expire after 2010, restoring the law that was in effect prior to 2001. The Administration has called for … -
If Done Properly, Reforming the Estate Tax Could Preserve Much-Needed Revenue
Revised March 16, 2005
A new Center report shows that the estate tax can be reformed in a way that would exempt large numbers of estates from the tax while preserving much-needed revenue that would be lost if the tax were permanently repealed. Under current law, the estate tax will be repealed entirely in 2010, … -
Many States are Decoupling from the Federal Estate Tax Cut
May 23, 2002
The 2001 federal tax legislation includes a phaseout of the federal estate tax, culminating in full repeal in 2010. On a much faster track, the legislation repealed over four years — 2002 through 2005 — the federal estate tax credit to which state estate taxes are tied. In …
