Update: When the Trump White House first proposed eliminating the estate tax back in April, we created this interactive depicting how few Americans the provision actually affected. With Trump unveiling a more fleshed-out version of his plan, we’re re-publishing this analysis.
A key provision of the roughly outlined tax-reform proposal introduced Wednesday by the Trump administration was to fully repeal the “death tax” — the provision of the tax code better known as the estate tax.
The estate tax (which famed conservative wordsmith Frank Luntz figured would be less popular if framed as a tax on death) applies an additional tax to those who die with an estate worth more than $5.49 million, the exemption per individual for 2017. It’s one of the more progressive parts of the tax code, aimed in part at reducing the extent to which families can amass huge wealth over time. Which by itself perhaps explains why President Trump isn’t a fan.
But it’s important to note how uncommonly estate taxes are applied. If you remain alive for any given calendar year, for example, the estate tax obviously doesn’t apply to you. But even among those who die, the application of the tax is relatively rare. The Tax Policy Center estimates that the estate executors for only 11,000 people who die in 2017 will end up having to file for the estate tax and that only 5,200 of them will end up having to pay anything.
Looking just at the 2.7 million people who are likely to die this year, then, here’s how infrequently the estate tax will be paid. Hit the “start killing” button.
Notice how rarely the little flying bundles of money appear.
But again, that’s looking only at the people who will die this year — may they rest in peace, and may none of them be reading these words. If we look at this as a fraction of all returns that are filed, it looks like this (using 2014 figures).
Very few people pay the tax — but it generates a lot of revenue. The Tax Policy Center estimates that in 2017, the 5,200 returns that will owe tax will generate $19.7 billion in taxes.
How much this would affect Trump and his family isn’t clear, because the president never released his tax returns. But it seems pretty clear that, whatever the net effect would be for the Trumps, a repeal of this tax would be a positive one for them.