What is the Death Tax -- Death Tax History -- Current Fight -- Repeal the Death Tax 

The Death Tax has been imposed on American taxpayers four distinct times over the last 200 years, each time to help pay the costs of a military conflict.  The first three times it was repealed shortly after the conflict ended.  

The Death Tax was first imposed in 1797, to help collect funds for the Undeclared War with France, and repealed in 1802.  In 1862, it was imposed a second time to collect funds for the Civil War, and was repealed in 1870.  In 1898 it was imposed again to collect funds for the Spanish-American war, and was repealed in 1902.[1]  

The Death Tax was re-imposed a fourth and final time in 1916, to support the U.S. involvement in World War I.  That war ended 90 years ago, yet the tax has been maintained ever since. Over the course of the last 90 years, the rates have changed several times.  The initial rate was 10%, and then increased to 25%, and ultimately climbed as high as 77%[2] - over 3/4 of a person’s life earnings.

In 1976 Congress enacted legislative changes designed to make it impossible for a person to transfer wealth without being taxed by either the Estate Tax (Death Tax), the Gift Tax, or the Generation Skipping Tax.  The Gift Tax applies to any gifts above $12,000 in a year (and any gifts in a lifetime over $1 million) and the Generation Skipping Tax applies to any gifts that “skip” the first generation (children) and go to grandchildren.  Together, these taxes prevent any large transfer of life-earnings from escaping the IRS.

In 2001, President Bush signed the Economic Growth and Tax Relief Reconciliation Act (EGTRRA).  EGTRRA reduced the Death Tax from 55% in 2001 to 45% in 2009, and if left in law, will repeal the Death Tax in 2010.  However, due to complex Senate budget rules, the EGTRRA tax relief is not permanent.  In 2011, all of the EGTRRA tax relief “expires” and the applicable tax rates return to their pre-tax relief rates.  Consequently, the Death Tax will “come back to life” in 2011 at the rate of 55%....unless Congress acts to make repeal permanent. 

Will you join the fight for repeal?   

           [1] “Cost and Consequences of the Federal Estate Tax,” Joint Economic Committee, May 2006, http://www.house.gov/jec/publications/109/05-01-06estatetax.pdf.

           [2] Gary Robbins, “Estate Taxes: An Historical Perspective,” Heritage Foundation, January 16, 2004, http://www.heritage.org/research/taxes/bg1719.cfm.