A report on Estate tax in the United States

Estate tax returns as a percentage of adult deaths, 1982–2008.
Top Estate Tax Rate, 1914–2018

Federal tax on the transfer of the estate of a person who dies.

- Estate tax in the United States
Estate tax returns as a percentage of adult deaths, 1982–2008.

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Inheritance tax

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Tax paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the estate of a person who has died.

Tax paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the estate of a person who has died.

For political, statutory and other reasons, the term death tax is sometimes used to refer to estate tax in the United States.

Chart of a trust

Trust law

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Legal relationship in which the holder of a right gives it to another person or entity who must keep and use it solely for another's benefit.

Legal relationship in which the holder of a right gives it to another person or entity who must keep and use it solely for another's benefit.

Chart of a trust

QTIP Trust: Short for "qualified terminal interest property". A trust recognized under the tax laws of the United States which qualifies for the marital gift exclusion from the estate tax.

Total revenue from direct and indirect taxes given as share of GDP in 2017

Tax

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Compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures (regional, local, or national), and tax compliance refers to policy actions and individual behaviour aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax reliefs.

Compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures (regional, local, or national), and tax compliance refers to policy actions and individual behaviour aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax reliefs.

Total revenue from direct and indirect taxes given as share of GDP in 2017
Pieter Brueghel the Younger, The tax collector's office, 1640
Substitution effect and income effect with a taxation on y good.
Budget's constraint shift after an introduction of a lump sum tax or a general tax on consumption or a proportional income tax.
The Laffer curve. In this case, the critical point is at a tax rate of 70%. Revenue increases until this peak, then it starts decreasing.
General government revenue, in % of GDP, from social contributions. For this data, the variance of GDP per capita with purchasing power parity (PPP) is explained in 20% by social contributions revenue.
Egyptian peasants seized for non-payment of taxes. (Pyramid Age)
Public finance revenue from taxes in % of GDP. For this data, the variance of GDP per capita with purchasing power parity (PPP) is explained in 32% by tax revenue.
Diagram illustrating deadweight costs of taxes

Countries or subunits often also impose wealth taxes, inheritance taxes, estate taxes, gift taxes, property taxes, sales taxes, use taxes, payroll taxes, duties and/or tariffs.

Life insurance certificate issued by the Yorkshire Fire & Life Insurance Company to Samuel Holt, Liverpool, England, 1851. On display at the British Museum in London

Life insurance

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Contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of an insured person (often the policy holder).

Contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of an insured person (often the policy holder).

Life insurance certificate issued by the Yorkshire Fire & Life Insurance Company to Samuel Holt, Liverpool, England, 1851. On display at the British Museum in London
Amicable Society for a Perpetual Assurance Office, established in 1706, was the first life insurance company in the world.
Life insurance premiums written in 2005
Chart of a life insurance

However, if the proceeds are included in the "estate" of the deceased, it is likely they will be subject to federal and state estate and inheritance tax.

An attorney meets with client for estate planning.

Probate

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Judicial process whereby a will is "proved" in a court of law and accepted as a valid public document that is the true last testament of the deceased, or whereby the estate is settled according to the laws of intestacy in the state of residence of the deceased at time of death in the absence of a legal will.

Judicial process whereby a will is "proved" in a court of law and accepted as a valid public document that is the true last testament of the deceased, or whereby the estate is settled according to the laws of intestacy in the state of residence of the deceased at time of death in the absence of a legal will.

An attorney meets with client for estate planning.

Next, he pays any debts and taxes, including estate tax in the United States, if the estate is taxable at the federal or state level.

US Federal marginal income tax rates: comparison of 2018, 2017, 2016 rates for individual and married filers

Tax Cuts and Jobs Act of 2017

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Congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act , that amended the Internal Revenue Code of 1986.

Congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act , that amended the Internal Revenue Code of 1986.

US Federal marginal income tax rates: comparison of 2018, 2017, 2016 rates for individual and married filers
Tax Policy Center estimate of the annual changes in GDP and budget deficit over the 2018–2027 period under the Senate version of the bill. The cumulative GDP increase of $961billion is less than the deficit increase of $1,233billion, including macroeconomic feedback effects.
Comparison of U.S. federal revenues for two CBO forecasts, one from January 2017 (based on laws at the end of the Obama Administration) and the other from April 2018, which reflects Trump's policy changes. Key insights include: 1) Tax cuts reduce revenue collections relative to a baseline without them; 2) Tax revenues rise each year under both forecasts as the economy grows; and 3) The gap is larger initially, indicating larger stimulus effects in the earlier years.
CBO forecasts that the 2017 Tax Act will increase the budget deficit by $2.289 trillion over the 2018–2027 decade, or $1.891 trillion after macro-economic feedback.
Average tax rate changes for various income groups, by year, under the Conference Agreement, as of December 15, 2017. The slope of each line down to the right indicates larger benefits for higher incomes, while the upward shift of the lines over time indicates fading benefits (or increasing costs) across all income levels.
CBO and JCT estimate of the distribution of impact by income group (average dollars per taxpayer) under the Act. On average, taxpayers in the income groups highlighted in yellow will incur a net cost (shown as a positive figure as this reduces the budget deficit), due in part to reduced healthcare subsidies. Higher income taxpayers receive a benefit via tax cuts (shown as a negative number as this increases the budget deficit). The percent of taxpayers in each income group is also shown for the 2023 period.
Distribution of benefits during 2018 by income percentile under the Tax Cuts and Jobs Act (Conf. Cmte. version) based on data from the Tax Policy Center. The top 10% of taxpayers (incomes over $216,800) receive 52% of the benefit, while the bottom 60% (incomes under $86,100) receive 17% of the benefit. This excludes the impact of reduced ACA subsidies.
U.S. uninsured number (millions) and rate (%), including historical data through 2016 and two CBO forecasts (2016/Obama policy and 2018/Trump policy) through 2026. Two key reasons for more uninsured under President Trump include: 1) Eliminating the individual mandate to have health insurance (part of the Tax Act); and 2) Stopping cost sharing reduction payments.
Corporate after-tax profits (real or adjusted for inflation) have increased about 150% since 2000, yet real median household incomes are flat. The starting point is represented by 100.
U.S. corporate profits after-tax from 1970 to Q2 2017. The dollars are near record level (blue line, left axis), while the % GDP is high relative to historical levels (red line, right axis).
CBO data on share of U.S. federal revenues collected by tax type from 1967 to 2016. Payroll taxes, paid by all wage earners, have increased as a share of total federal tax revenues, while corporate taxes have fallen. Income taxes have moved in a range, with Presidents Reagan and G.W. Bush lowering income tax rates, and Clinton and Obama raising them for the top incomes.
President Trump and Vice President Pence celebrate the passage of the Tax Cuts Acts with Republican lawmakers at a press conference outside the White House.
Senator Tammy Duckworth and then House Minority Leader Nancy Pelosi press conference opposing the bill in 2017.

The indexed estate tax exemption was doubled, which means that people may not need to include charitable contributions being written into their will in order to reduce the estate tax paid, which is expected to reduce the amount of charitable contributions given to churches and nonprofit organizations overall.

55th United States Congress

War Revenue Act of 1898

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Legislation signed into law in the United States on June 13, 1898, which created a wide range of taxes to raise revenue for the American prosecution of the Spanish–American War.

Legislation signed into law in the United States on June 13, 1898, which created a wide range of taxes to raise revenue for the American prosecution of the Spanish–American War.

55th United States Congress

The legislation established the predecessor to the estate tax, and twice the Supreme Court of the United States issued rulings about the law.

Grantor retained annuity trust

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Financial instrument commonly used in the United States to make large financial gifts to family members without paying a U.S. gift tax.

Financial instrument commonly used in the United States to make large financial gifts to family members without paying a U.S. gift tax.

A ProPublica report detailed how several ultra-wealthy families exploited the GRAT to avoided potentially billions in estate taxes.

President Obama signs the law into effect, on December 17, 2010, as members of Congress and others look on.

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

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Passed by the United States Congress on December 16, 2010, and signed into law by President Barack Obama on December 17, 2010.

Passed by the United States Congress on December 16, 2010, and signed into law by President Barack Obama on December 17, 2010.

President Obama signs the law into effect, on December 17, 2010, as members of Congress and others look on.

Estate tax adjustment. EGTRRA had gradually reduced estate tax rates until there was none in 2010. After sunsetting, the Clinton-era rate of 55 percent with a $1 million exclusion was due to return for 2011. The compromise package sets for two years a rate of 35 percent with an exclusion amount of $5 million. The negative revenue impact of this provision was estimated at $68 billion.

Gift tax in the United States

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Tax imposed on the transfer of ownership of property during the giver's life.

Tax imposed on the transfer of ownership of property during the giver's life.

Generally, if an interest in property is transferred during the giver's lifetime (often called an inter vivos gift), then the gift or transfer would not be subject to the estate tax.