July 15, 2019

GOMEZ ESTATE TAX BILL WILL AFFECT VERY FEW ESTATES – STATE BY STATE ESTIMATES

For years, conservatives have opposed the federal estate tax leaving the false impression that most families would be subject to the estate tax and that many small businesses and family farms would suffer terribly—perhaps even be forced out of business.

These were outright falsehoods perpetrated on the public to shield the richest from paying their fair share on the substantial wealth they were accumulating. A strong estate tax is an important tool to provide a check on the growing concentration of wealth and create an economy that works for all of us.

The Gomez bill, the For the 99.8% Act, will do the following:

  • Restore the level that estates are exempt from paying taxes to the 2009 amounts. In 2009, estates worth $3.5 million for an individual and $7 million per couple were exempt from paying any federal estate tax. The Tax Cuts and Jobs Act (TCJA) raised the exemption levels to $11.2 million and $22.4 million—three times higher than in 2009.
  • Restore the lowest estate tax rate to 45%, which was in effect in 2009, up from the current 40% under the TCJA.
  • Create more progressive rates as estates grow in size. Estates valued between $10 to $50 million will be taxed at 50%; between $50 million to $1 billion at 55%; and over $1 billion at 77%—the top estate tax rate from 1941 to 1976 on estates valued at $50 million-plus.[1]

The chart and table below and on the next page compare the number of estates that paid federal estate taxes in 2009 with the new number estimated for 2018. In both cases, just 0.23% or fewer estates paid any tax—about 2 out of 1,000. The 2009 estimates are roughly what could be expected under Rep. Gomez’s For the 99.8% Act.

Source: ITEP, “The Federal Estate Tax: An Important Progressive Revenue Source,” Dec. 6, 2018 https://itep.org/the-federal-estate-tax-an-important-progressive-revenue-source/

 

Endnotes

[1] Joint Committee on Taxation, “History, Present Law, and Analysis of the Federal Wealth Transfer Tax System” (March 18, 2015), p. 6. https://www.jct.gov/publications.html?func=startdown&id=4744

[2] Institute on Taxation and Economic Policy (ITEP), “The Federal Estate Tax: An Important Progressive Revenue Source,” December 6, 2018 https://itep.org/the-federal-estate-tax-an-important-progressive-revenue-source/