NC Budget and Tax Center

Estate Tax Repeal Based on Myths Not Facts

The House Finance committee voted to repeal the estate tax yesterday.  The repeal will benefit less than 123 estates in North Carolina and make our tax system more upside-down and less able to invest in educating children, updating the state’s infrastructure and supporting community health and safety.

Proponents relied on common myths about the estate tax to support the repeal.  The reality is far different from their claims as this important piece from the Center on Budget and Policy Priorities shows.  Among the key facts about the estate tax:

1. Everybody dies, but only the richest 2 in 1,000 estates pay any estate tax.

2. The few estates that pay estate tax generally pay less than one-sixth the value of the estate in tax

3. The costs of complying with the estate tax are relatively modest and are consistent with the costs of complying with other taxes.

4. Only a handful of small, family owned farms and businesses owe any estate tax at all, and virtually none would have to be liquidated to pay the tax.

5. Large estates consist to a large degree of “unrealized” capital gains that have never been taxed; the estate tax is the only means of taxing this income.

6. Eliminating the estate tax would not substantially affect private saving, and it would greatly increase government dissaving (i.e., deficits); as a result, it would more likely reduce the capital available for investment than increase it.

7. The estate tax affects only those most able to pay, and the funds it raises help support a range of programs that benefit the nation.

3 Comments

  1. jlp75

    February 21, 2013 at 2:39 pm

    It is highly appropriate that those facts are in a green font considering facts are like kryptonite to Republicans.

  2. Doug

    February 21, 2013 at 4:37 pm

    Your post is misleading. With ~9 million people there would be 18000 estates affected of just the current residents. That would be on average 237 estates affected. Not to mention that these estates have already had taxes confiscated over the years in the income and gains used to build them, whether you call them unrealized or not, the build up of the asset has had significant taxable events through the business that is being invested in. And the fact that many are the small businesses and farms that would potentially have to be liquidated to pay such a large penalty is significant since all assets are treated as liquid. Who cares if they are able to pay…everyone is technically able to pay every dollar they make to the government and then live off the system….but should they?

  3. Cedric

    February 22, 2013 at 9:26 am

    The blog informs that 2 out of every 1000 estates (not human beings) were subject the estate tax. Also, I’m curious as to where are all the small farms in NC that are subject to the estate tax. If only 40 small businesses and farms nationwide paid any estate taxes last year, how is it that so many small farms and businesses in NC are paying the estate tax? The math simply doesn’t add up regarding this particular claim.