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State-by-State: Costly Estate Tax Repeal Benefits Only Few Wealthiest Estates

September 12, 2017 at 11:30 AM

With Republican leaders calling for repealing the federal estate tax in the upcoming tax debate, we’ve updated our estimates showing that the tax affects very few estates in each state and that its repeal would provide windfall tax cuts to the wealthiest heirs (see table).

The estate tax applies only to the value of an estate that exceeds $5.5 million per person ($11 million per couple). That’s more than middle-income Americans typically earn in a lifetime. Nationally, just 5,400 estates — the wealthiest 0.2 percent of Americans who die — will owe any estate tax in 2018, Congress’ Joint Committee on Taxation estimates. And while President Trump called the tax a “tremendous burden” for small businesses and family farms, only 50 such estates will face it.

Repeal would provide millions of dollars in tax cuts to the wealthiest estates and their heirs. Under a 2015 proposal that lawmakers re-introduced this year in both the House and Senate, taxable estates in 2018 would receive an average tax cut of more than $3 million. The 344 estates worth at least $50 million would receive tax cuts averaging over $20 million apiece. The proposal would also cost $269 billion over a decade, expanding deficits and, as a result, adding to pressure for cuts in federal programs.

TABLE 1
A State-by-State Look at the Federal Estate Tax
  Number of taxable estates in 2018 As percent of total estates
Alabama 40 0.1%
Alaska * *
Arizona 80 0.1%
Arkansas 20 0.1%
California 1,070 0.4%
Colorado 70 0.2%
Connecticut 110 0.4%
Delaware 20 0.2%
District of Columbia 10 0.3%
Florida 620 0.3%
Georgia 120 0.1%
Hawaii 20 0.2%
Idaho * *
Illinois 220 0.2%
Indiana 70 0.1%
Iowa 70 0.2%
Kansas 50 0.2%
Kentucky 40 0.1%
Louisiana 50 0.1%
Maine 20 0.1%
Maryland 80 0.2%
Massachusetts 130 0.2%
Michigan 100 0.1%
Minnesota 80 0.2%
Mississippi 20 0.1%
Missouri 80 0.1%
Montana * *
Nebraska 40 0.2%
Nevada 50 0.2%
New Hampshire 30 0.3%
New Jersey 150 0.2%
New Mexico 30 0.2%
New York 470 0.3%
North Carolina 110 0.1%
North Dakota * *
Ohio 140 0.1%
Oklahoma 50 0.1%
Oregon 20 0.1%
Pennsylvania 140 0.1%
Rhode Island * *
South Carolina 50 0.1%
South Dakota 20 0.3%
Tennessee 60 0.1%
Texas 400 0.2%
Utah 20 0.1%
Vermont * *
Virginia 130 0.2%
Washington 90 0.2%
West Virginia * *
Wisconsin 70 0.1%
Wyoming 10 0.3%
United States 5,400 0.2%

* Data deleted by IRS to prevent disclosure of individual taxpayer information due to small number of estates.

Note: Estimates are rough given the small numbers of estates paying the tax each year. Figures are rounded to the nearest ten estates and the nearest tenth of a percent.

Source: CBPP based on Internal Revenue Service (IRS), Joint Committee on Taxation (JCT), Centers for Disease Control and Prevention (CDC), and Census. For the number of taxable estates, we assume that each state’s share of the JCT estimate for 2018 would be the same as in the IRS data of estate tax returns filed in 2015. For the total number of estates, we apply the CDC estimates of adult deaths and total population in 2015 by state to the Census estimate of U.S. population for 2018.

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