NCPA - National Center for Policy Analysis

Who Pays The Estate Tax?

March 1, 2001

Some Democrats have suggested as an alternative to estate tax repeal that the value of estates exempted from the tax -- which is already scheduled to gradually rise to $1 million -- be increased to $5 million or even $20 million. How much tax do estates of various sizes pay now?

According to U.S. Treasury Department estimates for 2000, the estate and gift taxes together raised $29 billion -- with the death tax raising just $20 billion of that.

  • Estates with taxable returns between $600,000 and $1 million paid $921 million, from 20,106 estates, for less than 5 percent of the total.
  • The 19,846 taxable estates between $1 million and $2.5 million paid $4.85 billion, or 24 percent of the total.
  • The 4,633 estates between $2.5 million and $5 million paid $4.19 billion, or a little less than 21 percent of the total.

Thus about 49 percent of the estate tax is paid by estates under $5 million.

  • The 2,524 estates between $5 million and $20 million paid another $5.98 billion, 29 percent of the total.
  • The 374 estates of $20 million and up paid $4.41 billion, or under 22 percent of the total.

Thus raising the estate tax exemption to $5 million would initially cut death tax revenues almost in half. And raising the exemption to $20 million would cut revenues by more than three-fourths.

Source: "Examining the State of the Estate Tax," Wall Street Journal, February 26, 2001.

 

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