The current estate tax law (or “death tax” as Republicans often call it) is set to expire at the end of this year. If it does, the value of a deceased person’s estate that is exempt from government taxation will drop from $5.12 million to $1 million, and the maximum tax rate will jump from 35% to 55%.
The issue has raised a major debate in Congress. While most Republicans are obviously in favor of reinstating a lower estate tax hit, many Democrats have continued the theme of making the wealthy give back to the people. A small minority of Democrats, largely from farming states, have supported reductions in the estate tax.
Nonetheless, even majority Democrats agree that the tax should not jump back to the 55% level. President Obama has been supporting a 45% tax with a $3.5 million exemption. The difficulty has been in determining exactly what the numbers should be.