The Joint Committee on Taxation of the United States Congress (“JCT”) has issued a report on the revenue alternatives of several outcomes of the “Fiscal Cliff”. The report is located at https://www.jct.gov/publications.html?func=startdown&id=4492.
It provides an interesting insight into the small number of decedent’s estates affected by the estate tax. The political attention paid to this issue far exceeds the percentage of decedent affected and the amount of revenue raised.
It is estimated 2.4 million people died in the United States in 2008. Of those, the JCT states only 17,172, less than 1 percent, had to pay any estate tax, a total of $24.87 billion paid. They state only $10 billion in estate tax revenue will be received in 2012 with the exemption at $5,120,000.
They estimate if we go back to the $1,000,000 estate tax exemption in 2013, about 55,200 decedent’s estates will pay total estate tax of $37.7 billion. Finally, they estimate if the President’s proposal of having a $3.5 million estate tax exemption is adopted, a total of $17.7 billion in estate tax would be paid for decedents dying in 2013. They estimate if the 2012 law is extended, an exemption of $5.12 million adjusted for inflation, only $11 billion in estate tax would be collected in 2013.
Please note the report also thoroughly discusses the other changes that will occur in the estate and gift tax arena if we “go off the fiscal cliff”. Those include the following (in addition to those mentioned in my prior post):
– The qualified family owned business deduction would come back in the amount of $675,000.
– Exclusion from the taxable estate of 40 percent of the value of any land subject to a qualified conservation easement, up to a maximum exclusion of $500,000, would again have certain geographic restrictions.
Kevin G. Staker
Estate Tax News