TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, September 3, 2013

CBPP: Ten Estate Tax Myths and Realities

CBPP Logo (2013)Center on Budget and Policy Priorities:  10 Myths and Realities About the Estate Tax (Aug. 29, 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 (effectively $10.5 million per married couple). The estate tax thus limits, to a modest degree, the large tax breaks that extremely wealthy households get on their wealth as it grows, which can otherwise go completely untaxed. Though the estate tax has been an important source of federal revenue for nearly a century, a number of myths continue to surround it:

  1. The estate tax is best characterized as the “death tax"
  2. The estate tax forces estates to turn over half of their assets to the government
  3. Weakening the estate tax wouldn’t significantly worsen the deficit because the tax doesn’t raise much revenue
  4. The cost of complying with the estate tax nearly equals the amount of revenue the tax raises
  5. Many small, family-owned farms and businesses must be liquidated to pay estate taxes
  6. The estate tax constitutes “double taxation” because it applies to assets that already have been taxed once as income
  7. If policymakers decide to retain the estate tax, the logical top rate would be 20%, the same as the capital gains rate
  8. Eliminating the estate tax would encourage people to save and thereby make more capital available for investment
  9. The United States taxes estates more heavily than do other countries
  10. The estate tax unfairly punishes success

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The estate tax is not a "death tax?"

So what triggers it exactly?

Whatever it is called, it is a welfare program for lawyers and life insurance companies, among others.

Posted by: save_the_rustbelt | Sep 4, 2013 5:16:53 AM