So many discussions on changing the death tax or Inheritance Tax there is an often quoted number of 0.24 percent of the population will ever pay that tax. I was wondering if that number holds for the not-so-distant future with more Baby-Boomer’s, um, not making it to 2020?
The exclusion amount for the estate tax is $5 million so if you die with less than $5 million that you couldn’t shelter from the estate tax, there is no estate tax.
How many people do you think have $5 million dollars when they die?
The trouble is many, if not most Republicans *think *they will. I cite Joe the Plumber. Who thought his maybe, someday plans of owning a plumbing business would put him north of 250k a year in profit.
According to this article there were 980,000 people in the US with a net worth over $5 million in the US in 2009.
There were approximately 305,500,000 people in the US in 2009.
A little math says that is 0.32% of the population who have over $5 million net worth.
So not too far off from the OP. Considering that many will manage to hide income to avoid paying such a tax I can live with 0.24%.
They wouldn’t even necessarily have to make an effort to hide their assets: Some types of assets (iirc, such as a family farm) are exempt.
Of course we all realize that after 5 mill. the government takes a part of that. There is no confiscation of wealth. Paris Hilton will get many millions just like she should for her great selection of her parents.
I thought Conrad disinherited her. (I do not follow these things but thought I read that somewhere once…on the internet probably so must be true.)
Re-reading the OP I guess I did not really answer the question.
It depends on a lot of actuarial table stuff. Expected growth of population, expected death rates, expected income levels, expected economy, expected inflation and so on.
My guess is the 0.24% number will decrease as we are seeing a trend of concentrating wealth in to fewer hands. Basically the rich get richer and everyone else gets poorer.
That said, when you consider the overall population and a “mere” ten years I doubt that percentage would move a whole lot. My guess is it’ll get smaller. There’ll be more rich people but there’ll be a lot more poor people so the percentages go down.
So the 0.24% might become 0.2% by 2020 or something (just guessing) but I’d be surprised if it was more than that just on a gut-check level (read I pulled that number out of my ass).
I know seven people in my family (3 couples + my dad) who had, or will have, $5 million when they die. I plan on being the eighth.
Oh well, it must be really common then.
I wasn’t the one who asked the question.
Yeah, got to count those couples twice because they each have to pay when the other one dies first.
Not too sure what you meant by that, but in the US spouses usually don’t have to pay inheritance tax on assets left to one spouse when the other dies.
On a point of terminology, it is not an inheritance tax, it is an estate tax. The tax is on the estate. In an inheritance tax (except in the UK), the tax is paid by the recipient. There is no Federal Inheritance Tax, but several states do impose one.
THat was my point. The previous poster said he knew 8 people who would be affected by the tax, but six of them are couples. So only 3 estates out of those 6 people are affected.
Her hijinks must be pretty egregious if they extend backwards in time and inspire her granddad to disinherit her two years before she was even born.
If memory serves, her father has set up the family money so that something like 97% of it will go to charity when he dies.
Barron Hilton then? Like I said, I really do not pay attention to her or her family.
Okay, so even with more people passing, the number of those with >= 5 Mill is still too small to worry about.
Not to mention there are a LOT of ways to do some financial and estate planning to leverage that $5 million ($10 for a married couple) to get the maximum amount available.
Annual gifts of 13K per year, per donor, per recipient.
Life Insurance trusts, to pay the tax due upon the second spouse’s death.
Creation of family partnerships, to get discounts on the gifts you do make.