Death and Taxes… Actually Certain?

by Kelly on January 15th, 2007

As Congress continues to ponder whether the federal estate tax makes any sense, the Citizens for Tax Justice weighs in with some IRS statistics.

Consider this: In 2004, there were 2,429,024 Americans who died. Only 18,431 of those Americans were required to pay federal estate tax in 2005. If you’re keeping score, that’s .8% - yep, less than 1%. That represents a dip of more than 30% over the prior year, not surprising since the federal estate tax exemption continues to rise.

A little more surprising is the number of taxable estates over $20 million - almost 500 - which comprised more than 1/3 of all federal estate taxes paid (the average net estate in that category was more than $65 million). And while the top rates for federal estate taxes (a progressive tax, not a flat tax) can reach almost 50%, the average federal estate tax rate for those who actually paid tax was just over 12%.

What does this all mean? Well, practitioners like to think it means that there is some stellar estate planning going on (ahem). It’s more likely that the federal estate tax just doesn’t affect Americans in huge numbers.

Curious as to what those in your state paid? You can check out a state by state comparison here (download as a pdf)