Federal ‘Repeal’ Of Estate Tax Puts Burden On States

Everyone understands the Economic Growth and Tax Relief Reconciliation Act of 2001.  Not everyone understands, however, that this was a tax increase, not a decrease, for the federal government, and in turn a tax increase for many Americans; and that 100 percent of the burden of the federal estate tax phase-out has been placed on the states.  While state estate tax-revenues decrease and then disappear (In the case of those states that limit their death tax to the amount of the credit for state death taxes, i.e., a so-called “pick-up” tax), federal estate tax revenues will actually increase over the next nine years until the scheduled “repeal” in 2010, as the net federal estate tax rate will be greater than it was when it was enacted in every year but one.