A Tax Break for the Heirs of the Very Biggest Estates: What’s at Stake for Wisconsin in the Fiscal Cliff
An especially generous version of a tax break for the heirs of the very biggest estates is slated to expire at the end of the year, as part of the combination of events known as the fiscal cliff. Congressional Republicans favor reinstating the lavish estate tax break, initiated in 2010, which lets couples pass on $10 million to their heirs without paying any taxes; single people may pass on $5 million tax free. President Obama advocates letting the estate tax break return to the 2009 level, which lets couples pass on “only” $7 million before paying any estate taxes; single people may pass on $3.5 million untaxed. Under President Obama’s plan, 99.7% of estates would be exempt from the estate tax.
Only 40 of the very biggest estates in Wisconsin each year would benefit from the more generous Republican plan, compared to the President’s position. Put another way, only the richest 1 out of every 1,000 Wisconsin estates would benefit from the additional tax break proposed by Congressional Republicans.
The more generous version of the estate tax plan would increase the deficit by $141 billion over the next ten years. For estates that receive it, the bigger break would be worth more than a million dollars.
Given the cost of the more generous version of the estate tax break and the very small number of estates that would benefit, Congress should let the estate tax revert back to its previous status.