FAQs

What is the rate of the estate, gift and generation-skipping tax (which is really a tax on death)?
In 2001, The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) took the first step since the Death Tax was permanently adopted to eliminate it.   As a part of broader tax reforms, congress phased out the Death Tax as follows:

*Amount excluded from the tax

Because the 2001 Act is not permanent, the death tax comes back in 2011 at the previously high and confiscatory level.   Advocates for repeal continue to seek permanent elimination of the Death Tax.

Have the assets that are taxed with the Death Tax been taxed before?
Yes.   Those assets have been taxed with income tax, payroll tax, sales tax and capital gains tax, as well as other taxes.

What size estates file estate tax returns?
40.2% of all estate taxes paid in 2003 were $5 million or less in size.

When is the "Death Tax" due?
The tax is due 9 months after the date of death, and is payable in cash.

How much revenue is raised by the Death Tax?
Less than 2% of the government's revenue is generated from the "Death Tax." In 2001, it was $23.5 billion, just 1.4%.

What is the cost to collect the Death tax?
It has been estimated that is costs approximately 65 cents for every $1.00 of revenue for the collection and compliance costs of the Death Tax.   Some believe that the real cost of the tax is equal to the tax collected.

What is the generation-skipping tax?
The generation-skipping tax or GST is a tax on assets that you pass on to your grandchildren at an effective 80% rate, once you have utilized your GST exemption.

What is the economic effect of repealing the death tax?
In a study done by The Center for the Study of Taxation, it was determined that if gift, estate and generation-skipping taxes had been repealed in 1971, by the year 1991 there would have been 262,000 more jobs, $46.3 billion more in GDP and $398.6 billion more in capital.

Is the Death Tax a disincentive for the growth of family businesses?
In a study conducted by The Tax Foundation, it was found that to match the disincentive effect of the death tax, income taxes would have to be raised up to roughly 70% or more than twice the top marginal income tax rate of 39.6%.

How does the Death Tax affect the succession of a family business to future generations?
More than 70% of family businesses do not survive the second generation; 87% do not make it to the third generation as assets must be sold to pay the Death Tax .

How does the small business community view the Death Tax?
Unfavorably. 150 trade and industry organizations have formed the Family Business Estate Tax Coalition, whose sole purpose is to repeal the Death Tax.

What is the general public's attitude toward repeal of the Death Tax?
Favorable. In national polls, focus groups and instant response sessions - 75% of respondents believe that the Death Tax should be repealed.

How many family businesses are there in America?
Within the definition that the family controls the business either by stock or through management, 91% of all businesses in America are family-owned.

How many states have repealed inheritance taxes?
Twenty states have repealed inheritance taxes, five states (Delaware, Indiana, Kansas, North Carolina and Alaska) most recently in 1998 and 1999.

What is the history of estate, gift and generation-skipping taxes?
The Death Tax was initiated in 1916 to fund World War I. It was maintained in the tax code through the 20's and 30's to help prevent the concentration of wealth. Since that time, anti-trust laws have eliminated those concerns, but to date the Death Tax remains intact.

What country has the highest rate of Death Tax?
Japan has an inheritance tax of 70% but after credits and exemptions, it is an effective tax rate of 30.3%.   The United States has the highest rate of estate tax in the world at the rate of 55% and an effective rate of 44%.

Please e-mail us with your comments, death tax horror stories and suggestions on-line at feedback@deathtax.com.

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