Rich Becoming Middle-Class
June 30, 1997
Pity the poor millionaires -- of whom there are so many these days. Inflation and the booming stock market have pushed those who were merely comfortably-fixed into the brackets of the well-to-do. Those who never dreamed they would face an estate tax are now staring it in the face.
- Since the current $600,000 exemption was put in place in 1987, inflation has pushed prices up 42 percent and the stock market -- as measured by the Standard & Poor's index -- has risen 200 percent.
- It is evident these increases have pushed many into estate tax territory, since 54 percent of all estate tax returns filed in 1995 -- a total of 37,329 -- were from estates valued at less than $1 million.
- Marginal tax rates range from 37 percent on the first dollar over $600,000 to 55 percent on taxable amounts over $3 million.
- Critics say the estate tax is both an anachronism and inefficient -- witness the fact it raises only 1 percent of federal revenues and costs 65 cents for compliance on each dollar raised.
Experts estimate that 90 percent of family businesses that close after the death of the founder do so because heirs cannot pay the estate tax without liquidating the business.
Source: Ed Rubenstein, "Right Data," National Review, June 30, 1997.
Browse more articles on Economic Issues