“Frankly, a class discrimination”.  Quote from The Wall Street Journal about the newly established estate tax, 1916.

One hundred years ago, as World War I raged in Europe, Congress wanted to boost U.S. revenues in case America joined the fighting, so lawmakers voted for a new tax on a person’s assets at death.  This levy affected fewer than 1% of Americans who died and raised less than 1% of federal revenue in 1917.

Most lawmakers saw the tax as a reasonable way to raise revenues, with its top rate of 10% and an exemption of $50,000 ($1 million in current dollars).  Opponents of the tax were not able to get the tax repealed; however, Treasury Secretary Mellon, one of its most vocal opponents, was able to get the rate lowered.  Today, the tax is assessed on up to 40% of your assets at death, above an exemption of $5.45 million per person.

What will the future bring?  As always, future presidents and Congress will continue to have great influence over estate taxes.  We keep current on revenue-generating proposals and the ongoing discussions about revising the Internal Revenue Code in order to help optimize client estate planning goals.