Thursday, August 13, 2009

Fall and Rise of the Estate Tax Exemption

That "insider tip" about Congress simply extending the estate tax for a year – thus preventing its repeal – might be on the mark. Today's WSJ suggests the House may vote to do just that.

If the one-year patch materializes, the estate tax exemption will remain at its all-time high of $3.5 million for another year. After that? As noted here recently, tax legislation sometimes takes surprising twists.

As this table (compiled for my own education) shows, the notion of how rich a family needs to be for its wealth to be redistributed has taken remarkable swings. (The exemption doesn't tell the whole story. Definitions of "estate" fluctuated, as did rates. In the mid-twentieth century, the stingy $60,000 estate exemption was paired with a separate $30,000 gift exemption.)

For a history of the estate tax, see Ninety Years and Counting.

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