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Estate Tax

NETWORK supports a fair federal estate tax. The estate tax has been an important source of federal revenue for almost a century—until January 2010.  In 2001, President Bush and Congress created a schedule in which the estate tax would be gradually reduced until 2010, when it would disappear. However, without a legislative change it is to return to 2001 levels in 2011. No estate tax is being collected in 2010. 

Historically, estate taxes were only collected in times of war until the early 20th century, when President Theodore Roosevelt and others (including Andrew Carnegie) expressed their support for them as a way to address the enormous gap between rich and poor, which was considered by many to be a threat to democracy.

Approximately 99% of estates pay no estate tax at all. (In 1976, the percentage was a little over 92%.) Of those that do, the average rate is about 19%, according to the IRS.

Estate tax is due only on the portion of the estate above the exemption level—not on the entire estate. The exemption rate for 2009 was $3.5 million.For example, an estate worth $4 million would be subject to the estate tax on only $500,000. Furthermore, some of this could be shielded from taxation through available deductions such as charitable bequests and donations.

Opponents of the estate tax have, for several years, used emotionally charged language to convince millions of Americans that their families would have to pay half of any inheritance to the government. This is flatly untrue.

Opponents have stated that family-owned businesses and farms would are being decimated by the estate tax. Under the 2009 tax rate, only 94 businesses nationwide would owe any estate tax; and the American Farm Bureau Federation cannot identify a single example of a farm having to be sold to pay the tax. Estate taxes payments can be spread across 14 years. Many families also legally shelter significant portions of their estates with the help of tax lawyers.

There are proponents and opponents of an estate tax, as well as those favoring a reform of the system.

“As regards taxation, assessment according to ability to pay is fundamental to a just and equitable system.”  Pope John XXIII, Mater et Magistra: Christianity and Social Progress (1969) #132