As part of the so-called “fiscal cliff,” the estate tax will revert to its Clinton-era level of of 55 percent with a $1 million exemption per person. (The exemption is the amount of an estate that can be passed on tax-free.) Neither Democrats nor Republicans are interested in seeing that occur. Democrats have proposed setting the rate at 45 percent with a $3.5 million exemption, while Republicans want a 35 percent rate and a $5 million exemption, which is the current level.
Former White House economist Jared Bernstein noted that neither of these plans entails applying the estate tax to even the richest 0.5 percent of estates:
My point here is that in neither case, and in no year from 2011 to 2022, does either plan reach even 0.5% (that’s half a percent!) of estates. The D’s plan starts out hitting about 0.25% of estates and climbs to 0.35%; the R plan goes from about 0.15% to about 0.2%.
So, let’s be clear—under either side’s plan, the estate tax ain’t biting hardly anyone. Death may be certain, but taxes—at least this one—is much more discerning.
The Center for American Progress tax plan includes an estate tax of 48 percent with a $2 million exemption. Billionaire investor Warren Buffett, former President Jimmy Carter, and Bill Gates Sr. all recently signed a letter calling for a higher estate tax than that proposed by President Obama and Congressional Democrats.