Thursday, May 12, 2016
Center on Budget and Policy Priorities, State Estate Taxes: A Key Tool for Broad Prosperity:
As the income gap between the wealthiest Americans and those at the bottom and middle has widened in recent years, many states have eliminated their estate tax ― a key tool for reducing inequality and building broadly shared prosperity. States that have eliminated their estate tax should reinstate it and those with an estate tax should keep it and, if needed, improve it.
Only the very wealthiest taxpayers pay estate taxes — just 2.56 percent of estates, in the states with the tax, on average. The estate tax raises revenue for public services that build a stronger economy, protects against extreme levels of income inequality, and ensures that the wealthy cannot avoid paying taxes on certain forms of wealth.
A phase-out of the federal estate tax enacted under President Bush in June 2001 effectively repealed state estate taxes by 2005 unless states acted to retain this tax. Many states kept their estate taxes intact by passing legislation to “decouple” from the federal law or by creating separate taxes, but other states failed to act, allowing their estate taxes to disappear.
That was a mistake. Estate taxes serve many important public purposes, including:
- Providing revenue for investments that promote a strong economy. ...
- Reducing inequality. ...
- Closing a loophole that benefits the wealthiest