Limited Reach Of The Estate Tax


With the increase of the unified credit equivalent amount to $5.25 million and its indexing for inflation, clearly there will be a lot less fewer estates subject to estate tax than when exemptions were lower. The Congressional Research Service issued a report on February 15, 2013 that estimates the number of estates that will be subject to the tax, and these figures are REALLY LOW. They also apply an interesting “how many taxable estates are expected in a given state” analysis.

The conclusions of the report are:

a. The estate tax will affect less than 0.2% of decedents over the next decade.

b. The estate tax is concentrated among high income taxpayers: 96% is paid by the top quintile, 93% by the top 5%, 72% by the top 1%, and 42% by the top 0.1%.

c. About 0.2% of estates with half or more of their assets in businesses will be subject to the estate tax.

d. About 65 farm estates (or approximately one per state) are projected to be subject to the estate tax, and constitute 1.8% of taxable estates. Less than a fourth (0.4%) is projected to have inadequate liquidity to pay estate taxes. Less than 1% (0.8%) of farm operator estates are projected to pay the tax.

e. About 94 estates (about two per state) with half their assets in small business and who expect their heirs to continue in the business are projected to be subject to
the estate tax; they constitute 2.5% of total estates. Less than a half (1.1%) are projected to have inadequate liquidity to pay estate taxes.

The Estate and Gift Tax Provisions of the American Taxpayer Relief Act of 2012, Congressional Research Service, February 15, 2013

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Charles (Chuck) Rubin, Gutter Chaves Josepher Rubin Forman Fleisher P.A. | Attorney Advertising

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