Here’s why the rich hate the estate tax

Wealth


At its peak in the 1940s, the tax was 77 percent on portions of more than $10 million, then 70 percent for amounts over $5 million from 1976 to 1982.

More recently, the overall trend has been toward reducing the estate tax — it’s 40 percent today, down from 55 percent in 2000.

At the same time, the threshold for imposing the tax has significantly increased.

In 2000, the estate tax lifetime exclusion amount was $675,000. Today, it is more than $11 million — after the Tax Cuts and Jobs Act more than doubled the previous gift and estate tax exemption, also known as the unified credit.

Under current rules, a taxpayer can transfer $11.18 million per person, either in the form of gifts while alive or in bequests after death — and do so without having that amount be subject to the 40 percent gift and estate tax.

“Higher net worth individuals can now dispose of greater portions of their assets estate and gift tax free either by gifting them during lifetime or transferring them at death,” said Michael Feinfeld, a tax manager in the trusts & estates department at Marcum LLP.

At least for now, the tax code’s generosity is a limited-time deal. The $11.18 million estate and gift tax exemption is set to expire after the end of 2025, at which point it will revert to $5.49 million.

Only the wealthiest currently pay the federal levy. The number of estates now subject to the federal estate tax fell to just 1,700 after the tax cut from about 5,500 last year, amounting to less than 0.1 percent of all deaths.



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