Like a disc jockey who just can’t stop playing Freebird, Republicans can’t stop talking about the estate tax and our struggling family farmers and overburdened small business owners:
Here’s a short little history of the modern estate tax.
(1) In the 1970s, the estate tax had a relatively low exemption. The exemption (this is the amount of money you could pass to your heirs/devisees that was exempt from any federal estate tax) stayed at $60,000 from 1942 to 1976. This by the way is yet another example of how long it took for inflation indexing to become a standard part of federal legislation: $60,000 in 1942 was equivalent to $209,000 in 1976 in CPI adjusted terms. $60,000 in 1976 is the equivalent of $276,000 in 2021.
Here’s the subsequent history of the exemption, in current and 2021 dollars:
1977: $120,000 ($517,000 in 2021$)
1982: $225,000 ($607,000 in 2021$)
1987: $600,000 ($1.38 million in 2021$)
Then we decided that the purest form of meritocracy is to allow the children of the wealthy to live off the money their parents made or inherited themselves as the case may have been.
2002: $1,000,000 ($1.45 million in 2021$)
2006: $2,000,000 ($2.58 million in 2021$)
2010: $5,000,000 ($6,000,000 in 2021$)
Keep in mind that for married couples, who make up the overwhelming majority of the estates that might be subject to the estate tax, the surviving spouse gets to tack on the dead spouse’s exemption to her or his own.
This means that as a functional matter almost all “upper middle class” (ahem) people can at present pass on $23.4 million to the objects of their bounty with no federal estate tax consequences at all. And that’s not even taking into account that the recent creation of dynasty trusts in many states, overthrowing the much-beloved Rule Against Perpetuities of our Common Law Heritage, makes it possible to shelter vastly larger sums.
As of 2016, the 99th percentile of household wealth was $10.4 million, so this isn’t exactly the kind of problem that most Americans ever need to worry about, except of course for all the temporarily embarrassed billionaires who one day will no longer be kicking back a cool Coors 16-ouncer while watching Mork & Mindy on Channel 57, but will instead spend their spare time consulting with the lawyers who are paid $1,200 per hour to make sure no rich person pays any taxes whatsoever, if at all possible.
It couldn’t be clearer that the Republican party’s current agenda consists of nothing but protecting the largely ill-gotten wealth of the .1%, while at the same time trying to get people upset about the fact that the Cat in the Hat is now transgendered, or cancelled, or possibly both.