The Extent of the Estate Tax

As I have previously discussed, both parties have begun the political battle to determine the fate of the estate tax. Recently, the Senate voted to extent the Bush Tax Cuts but did not include any provision on the estate tax. One of the major arguments that Republicans have made against the estate tax is that if the Clinton Estate Tax Levels are implemented it would devastate “‘millions of family farms and small businesses.”

However, this is vast overstatement about would likely happen. Even under the Clinton Estate Tax Levels, only about 2-3% of all people who died that year in the United States incurred any estate tax. What is more surprising that the top brackets,who would pay the most estate tax, are actually the smallest group of individuals who incur a tax on the estate. Many more people paid the lower 18% estate tax rate. However, the author here might miss the message that opponents of the estate tax want to make. What do you think?

See Dylan Matthews, No One Pays the Estate Tax, Washington Post: Ezra Klein’s WonkBlog, July 26, 2012.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.