Wednesday, April 19, 2006

Estate Tax Applies to Few in Wisconsin

Next month the U.S. Senate will take up the issue of the estate tax. Many want to reform the estate tax while the rich and radical want to repeal it.

The right wingers have been pretty successful in tagging this tax the "death tax." This name change is not accurate but has been effective in convincing regular folks that they will somehow be affected by the estate tax. It is a tax on the passing of a large amount of wealth, it is not a tax on your death per se.

I have always believed that the vast majority of people in our country do not have enough to be on the receiving end of the estate tax. Based on statistics on a web site that I recently found, my suspicions have been confirmed. Here is an example of how many Wisconsinites are actually affected by the estate tax:

In 2003 when the exemption amount was $1 million, only 544 of the 46174 decendent in Wisconsin had estate tax liability – 99.7 percent ofdecedents paid no estate tax

If the exemption amount increases to $2.5 million, 99.9 percent of Wisconsin decedents would not pay estate tax, and the number of estates liable for federal estate taxes is reduced by 80 percent

Estate tax repeal is estimated to cost nearly three-quarters of a trillion dollars from 2011 – 2020. If the exemption amount is set at $2.5 million this reform option would cost approximately half the amount of repeal.

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