Where, Oh Where, Has the Estate Tax Gone?

Reprinted with permission of Tax Analysts.

The text below is an excerpt from the complete document. Read the full report in PDF format.

Abstract

Unless Congress changes the law, the federal estate tax will disappear on January 1, 2010. For the first time since the 1916 inception of the tax, the estate of anyone dying in 2010 will go to heirs tax free, a result of the 2001 tax law that phased out the estate tax over 10 years. But that law itself expires in 2011 and the estate tax will revert to pre-2001 law.

Introduction

The Economic Growth and Tax Relief Reconciliation Act of 2001 increased the effective estate tax exemption in steps from $675,000 in 2001 to $3.5 million in 2009 and reduced the top tax rate from 55 percent to 45 percent. Raising the exemption cut the share of estates subject to tax by nearly 90 percent - from 2.14 percent in 2001 to a projected 0.23 percent in 2009. That percentage is the lowest since at least 1934 (see figure).

(End of excerpt. The entire report is available in PDF format.)

Usage and reprints: Most publications may be downloaded free of charge from the web site and may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact publicaffairs@urban.org.

If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.

Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute.