U.S. says number of rich paying estate tax drops

By Reuters
Posted Oct. 15, 2010 at 4:59 p.m.

The wealthy few who pay a tax on inheritances has dropped significantly over the last decade, according to data released by the U.S. government on Friday.

Fewer than 15,000 estates paid taxes when passed on upon an heir’s death in 2009, compared with about 17,000 a year earlier, according to the tax-collecting Internal Revenue Service.

About 52,000 estates were taxed when passed onto heirs in 2001, according to the IRS.

Fewer estates are subject to the tax in large part because of a gradual increase in the threshold value of estates taxed since 2001.

In 2009, estates were taxed on values above $3.5 million for individuals, and $7 million for couples. The threshold for taxation has gradually risen since 2001 from $675,000.

The estate tax disappeared this year after lawmakers deadlocked on a way to extend it, but will automatically spring back with a threshold of $1 million for individuals at a rate of 55 percent if Congress fails to take action by 2011.

President Barack Obama and most Democrats back extension of the $3.5 million exemption, with a 45 percent rate.

Many Republicans want to scrap the tax, but some have offered a plan to exempt $5 million at a rate of 35 percent.

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