Written by William Ahern
Special Report No. 179
The scheduled but nevertheless unexpected repeal of the federal estate tax in 2010 and the prospect of its reinstatement in 2011 bring debate over the estate tax, or "death tax," to the fore again.
Some of the arguments are new: Would it be constitutional for Congress to reinstate the estate tax retroactively for 2010? But some of the arguments are a century old or more: Does the estate tax accomplish any worthwhile social purpose? Is it a good way to raise revenue?
Here we condense and update some earlier Tax Foundation studies on this age-old topic, with specific reference to the recent, surprising death and potential new life for the estate tax.
â€¢ The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, also known as the Bush tax cut of 2001, began phasing out the estate tax. The rate dropped from 55% in 2001 to 45% in 2009 to full repeal in 2010; meanwhile, the exemption level rose steadily as well, from $1 million to $3.5 million.