2006 Estate Tax to Affect Fraction of 1% of All Estates, New Low

Press Release
For immediate release–January 19, 2006
Contact: Christina Kasica, 617-423-2148, ext. 119
(cell phone 617-966-0554)

2006 Estate Tax To Affect Fraction of One Percent of All Estates, a New Low

Senate Expected to Consider Repeal Early in Year

DOWNLOAD THE REPORT HERE: Share of Estates Taxed Falls to Fraction of One Percent (PDF, 188 Kb).

BOSTON - New information released today by United for a Fair Economy (UFE) indicates that the rise in the estate tax exemption level from $1.5 million per person to $2 million ($4 million per couple) means that less than one third of one percent of all U.S. estates–or 0.27%–will be affected by the federal estate tax in 2006.

All other estates, or 99.73%, will be able to pass on 100% of their assets to heirs tax-free. Out of an estimated 2.3 million deaths in 2006, an estimated 6,343 estates will pay the tax. The share of estates taxed will fall to 0.16% in 2009, when the exemption rises to $3.5 million.

"Given the growing wealth divide, the principle of taxing multi-million dollar inheritances is important for our democracy," said Lee Farris, Senior Organizer for Estate Tax Policy at UFE. "Those who have been most fortunate in amassing wealth in our country should return a portion to the nation, since in many ways they have benefited the most from our American way of life."

The Senate is expected to attempt to repeal the federal estate tax in the first several months of 2006. The House of Representatives passed a repeal measure in April 2005.

Repealing the estate tax would cost the U.S. Treasury $1 trillion over the first ten years of full repeal. "At a time when Hurricane Katrina has raised the veil on the ugly specter of American inequality, it's wrong to pull so much money out of the federal budget to benefit a few members of the super-rich," said Farris. "We need this revenue for more important things, such as rebuilding New Orleans and reducing the budget deficit."

If Senate sponsors of the repeal bill determine that there is not enough support to pass the measure, they are likely to propose a dramatic rise in the exemption level and a lowering of the estate tax rate, currently set at 46%. "Gutting the estate tax by setting exemptions higher than $2 million with very low rates would constitute virtual repeal," Farris stated. "This would cause many of the same problems as full repeal."

Additional information is available in UFE's new background report entitled "Share of Estates Taxed Falls to Fraction of One Percent," available at http://faireconomy.org/reports/2006/estate_tax_share_falls.pdf. Lee Farris is available for comment or interview by calling 617-423-2148 ext. 119, or emailing 20ckasica@faireconomy.org">ckasica@faireconomy.org.

United for a Fair Economy (www.faireconomy.org) is a national non-partisan non-profit that spotlights the growing economic divide in the U.S.

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