Stop Calling the Estate Tax a ‘Death Tax’

Barry Ritholtz explains why it is “misleading” to use “the phrase ‘death tax’ to describe the levy on the estates of deceased multimillionaires.”

“In 2013, 2,596,993 Americans died, according to the Centers for Disease Control and Prevention. About 5,000 of them paid a tax after that mortal event. To be more accurate, their estates paid whatever tax was owed. That means 2,591,993 Americans died that year without paying any tax.”

“In other words, just 0.19 percent of all deaths in 2013 resulted in a tax. When 99.81 percent of all deaths don’t create a taxable event, calling it a death tax is mathematically nonsensical. What is the actual trigger for this taxable event? If your estate is worth less than $5.43 million dollars in 2015 (or $10.86 million dollars for a couple), you are exempt from the federal estate tax. Over that and your estate pays, which by the way is why the Internal Revenue Service calls it an estate tax.”

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