Posted by: Tim Mathis
A new report from Citizens for Tax Justice reveals the steady erosion of the estate tax, a part of the tax system at least a century old. This is due to revisions since 2001 that have shifted the exemption from $675,000 to $3.5 million in 2009. In addition, the rate owed on property exceeding that amount declined from 55% to 45%. Congress instituted a total repeal for 2010 and is set to make new changes when the code reverts to the pre-Bush rules next year. A repeal of the estate tax would be fiscally irresponsible, resulting in nearly $1.3 trillion in lost revenue over the next ten years.
The estate tax is meant to generate revenue from capital gains on property – including stocks, homes, and other real property – that occurred during the deceased owners’ lifetime but which the owners did not pay taxes on. There are multiple exclusions to the estate tax for farms and small businesses, and exemptions for charitable, religious, and educational donations.
Among all states, the number of estates that owed estate taxes in 2009 fell to 0.6 percent. In Louisiana, the percent was even lower – only 0.4 percent owed any estate tax. In 1828, Louisiana was one of the first states to pass an estate tax. However, in 1997, state lawmakers passed a law to phase out the estate transfer tax which was meant to redirect funds from the federal government to state coffers. In Fiscal Year 2003-04, Louisiana brought in an estimated $40.5 million from inheritance taxes. Today, revenues are almost nonexistent. In this time of fiscal crisis, state lawmakers ought to reconsider what was for so long a reliable and fair source of income.