Learn something new every day
More Info... by email
An estate tax is a tax that is imposed when property is transferred from a deceased individual to another individual, often a family member, without financial remuneration. Politically, the estate tax is a highly volatile subject which stirs passions on both sides. Some say it is like being taxed twice; others say it is a chance to tax what, essentially, becomes income added to an individual's net worth.
The estate tax is the tax that many also refer to as the death tax, simply because it is a tax that must be paid after a person dies. Of course, the dead person is not the person paying the tax, but rather it is paid by the person receiving property. In some cases, the tax may be paid by selling off at least a portion of the estate in order to cover the taxes.
Some argue against the estate tax, saying that the person who acquired the estate already paid taxes while acquiring the land. In some ways, it is argued that it is double taxation. Others say it especially hurts farming states, where families may be "land rich" but cash poor. In those instances, farmers may want land that has been in their family for generations, but be unable to pay the taxes necessary to acquire it.
Those arguing for the estate tax often point out that it is a tax paid almost exclusively by the top 1 percent of income earners in the United States. Therefore, it helps promote an equalization of wealth. They also note that few farmers are affected by the estate tax because the value of their properties does not meet the threshold.
The estate tax was one of the primary targets of the George W. Bush administration at the beginning of the 21st Century in the United States. Many in that administration saw this as a gratuitous and frivolous tax. Changes enacted into law dramatically increased the amount an estate had to be valued at before the tax was charged.
In the United States, the estate tax does not apply to any estates that are valued at less than $3.5 million US Dollars in 2009. It is slated for complete abolishment, but that could change with political winds. It is impossible to say when the estate tax may be abolished and what future thresholds may be, simply because the issue is so politically charged.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!