Estate and Gift Tax Revenues: Several Measurements

Estate and Gift Tax Revenues: Several Measurements

Order Code RL32768
CRS Report for Congress
Received through the CRS Web
Estate and Gift Tax Revenues:
Several Measurements
Updated March 16, 2006
Nonna A. Noto
Specialist in Public Finance
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

Estate and Gift Tax Revenues:
Several Measurements
Summary
The question of whether to permanently repeal the federal estate tax or to retain
but alter it remains a topic of congressional interest. This report presents a variety
of data measuring the payment of estate and gift taxes to help inform the debate. The
most recent IRS data are for estate tax returns filed in 2004. They show that the
3,494 gross estates of $5 million or higher accounted for just 0.14% of decedents and
11.6% of taxable returns, but 61.3% of estate taxes paid. The 30,276 taxable estate
tax returns filed in 2004 represented 1.24% of deaths. The tax rate on estates of $5
million up to $20 million averaged 29% of the gross estate.
This is a period of changing estate tax laws. The Taxpayer Relief Act of 1997
(TRA, P.L. 105-34) provided for a gradual increase in the exempt amount under the
estate tax from $600,000 for 1997 to $1 million in 2006. The Economic Growth and
Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16) superseded those
changes and raised the exempt amount to $1 million for 2002 and 2003, $1.5 million
for 2004 and 2005, $2 million for 2006 through 2008, and $3.5 million for 2009.
EGTRRA repealed the estate tax entirely for 2010, but the law sunsets on December
31, 2010. Unless new legislation governing the estate tax is enacted, the estate tax
will be reinstated in 2011 with an exempt amount of $1 million.
From 1998 through 2004 taxable estates as a percentage of deaths remained
relatively constant in the three highest gross estate classes over $5 million. The
rising exempt amount eliminated a large number of smaller estates, from $600,000
up to $1 million in gross size, from being taxable.
In FY2005 estate and gift tax revenues of $24.8 billion represented 1.1% of total
federal revenue and 2.7% of individual income tax revenue. CBO has estimated
estate and gift tax revenues from FY2006 through FY2016 under current law.
Annual revenues are projected to be $28 billion in FY2006, reach $29 billion in
FY2009, and then drop to $22 billion in FY2010 and $20 billion in FY2012. If the
estate tax returns in 2011 with an exclusion of $1 million, CBO projects that
revenues will rise steadily from $45 billion in 2012 to $67 billion in FY2016.
Both the Treasury Department and the Joint Committee on Taxation (JCT) have
estimated revenue losses through FY2016 from Congress acting in 2006 to
permanently repeal the estate and generation-skipping transfer taxes and modify gift
taxes starting in 2010. For the years prior to FY2011 both sources predict modest
revenue losses resulting from older people paying fewer gift taxes and fewer income
taxes on capital gains in anticipation of repeal. After repeal Treasury projects annual
revenue losses growing from $53 billion in FY2012 to $70 billion in FY2016. JCT
projects larger losses of $56 billion and $79 billion for those years. The 10-year
revenue loss estimate for FY2007-FY2016 is $339.0 billion for Treasury and $369.2
billion for JCT. Over the 10-year forecast period, permanent estate tax repeal
accounts for nearly 20% of the total net costs of the revenue proposals in the Bush
Administration’s FY2007 budget . This report will be updated as new data become
available.

Contents
Distribution of Estate Tax Payments in 2004 by Size of Gross Estate . . . . . . . . . 2
Increases in the Applicable Exclusion Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Relationship between the Filing Threshold and the Number of Taxable
Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Less Than Half of Estate Tax Returns Were Taxable . . . . . . . . . . . . . . . . . . . . . 12
Estate and Gift Tax Revenues: Past and Future . . . . . . . . . . . . . . . . . . . . . . . . . 13
Recent Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Gift Taxes versus Estate Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
CBO Revenue Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Treasury and JCT Revenue Loss Estimates from Permanent Repeal . . . . . 17
For Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
List of Tables
Table 1. Estate Tax Returns Filed in 2004, by Size of Gross Estate . . . . . . . . . . 2
Table 2. Taxable Estate Tax Returns Filed in 2004, Cumulative Percentages
by Size of Gross Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Table 3. Average Gross Estate, Average Estate Taxes, and Average Estate
Tax Rate on Taxable Returns Filed in 2004, by Size of Gross Estate . . . . . . 4
Table 4. Applicable Exclusion Amount and Maximum Tax Rate for the Estate
Tax, 1988-2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 5. Number of Estate Tax Returns Filed, Taxable, as a Percentage of
Deaths, and Tax Paid, 1998-2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Table 6. Number of Taxable Returns by Size of Gross Estate, 1998-2004 . . . . 10
Table 7. Taxable Estates as a Percentage of Deaths by Size of Gross Estate,
1998-2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 8. Percentage of Returns Taxable by Size of Gross Estate . . . . . . . . . . . . 12
Table 9. Estate and Gift Tax Revenues, Relative to Total Revenues and
Individual Income Taxes, FY1998-FY2004 . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 10. Estate Taxes and Gift Taxes, Net Collections, FYs 1998-2004 . . . . . 16
Table 11. CBO Projections of Estate and Gift Tax Revenues Through FY2016
under Current Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table 12. Treasury- and JCT-Estimated Revenue Changes Through FY2016
from Acting in 2006 to Permanently Repeal the Estate and Generation-
Skipping Transfer Taxes and Modify the Gift Tax Effective in 2010 . . . . . 19

Estate and Gift Tax Revenues:
Several Measurements
The question of whether to permanently repeal the federal estate tax or to retain
but alter it remains before the 109th Congress. This report presents a variety of data
available about revenues collected from federal estate and gift taxes to provide
background material for the debate. The text discusses the numbers presented in 12
tables.
The first section of the report presents the most recent distributional data
available from the Internal Revenue Service (IRS) for estate tax returns filed in 2004.
It shows the amount of estate tax paid by each of five categories of size of gross
estate, both separately (Table 1) and cumulatively (Table 2). It also presents the
average size of gross estate, the average estate taxes paid, and the average tax rate as
a percentage of the gross estate for each of the five size categories (Table 3).
The second section of the report describes the substantial increases in the
applicable exclusion amount (or exempt amount) under the estate tax scheduled from
1997 through 2009, the repeal of the estate tax scheduled for 2010, and the
reinstatement of the estate tax with a lower exclusion amount in 2011 if no changes
are made to current law. It also presents the scheduled decrease in the maximum
marginal estate tax rate (Table 4).
The third section of the report examines the relationship between the increase
in the applicable exclusion amount (or filing threshold) and the number of estate tax
returns that were filed and taxable, as well as the total amount of tax paid, from 1998
through 2004 (Table 5). It traces the differing patterns of the number of taxable
returns by size of gross estate, in both absolute numbers (Table 6) and measured as
a percentage of deaths (Table 7).
The fourth section reveals that less than half of all estate tax returns filed from
1998 through 2004 were taxable (Table 8). The percentage of taxable returns was
higher, the larger the gross estate size class. There was a large drop in the percentage
of returns that were taxable within each size class between 1998 and 2004.
The fifth section of the report presents data on actual estate and gift tax revenues
collected from FY1999 through 2005, comparing them to total federal revenues and
to revenues from individual income taxes (Table 9). Gift taxes as a percent of
combined estate and gift tax revenues fell sharply after EGTRRA was enacted (Table
10). The fifth section also presents the January 2006 Congressional Budget Office
(CBO) projection of revenues from estate and gift taxes from FY2006 through
FY2016, under current law (Table 11). Finally, it presents estimates published by
the Treasury Department in February 2006 and the Joint Committee on Taxation in
March 2006 of revenue losses from FY2006 through FY2016 if the sunset provision

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of EGTRRA were removed in 2006, thereby permanently repealing the estate tax and
generation-skipping transfer taxes and modifying the gift tax effective in 2010 (Table
12).
Distribution of Estate Tax Payments in 2004
by Size of Gross Estate
The estate tax is considered the most progressive part of the U.S. tax system —
that is, the tax that falls most heavily on the wealthiest members of society. The
distribution of estate tax payments is highly concentrated in the largest gross estate
size categories. Estate tax returns filed in 2004 paid a total of $21.5 billion in estate
taxes, as shown in the first row, third column of Table 1. The 30,276 taxable returns
(column 2) represented 1.24 percent of deaths in the prior year, 2003 (column 4).
Table 1. Estate Tax Returns Filed in 2004,
by Size of Gross Estate
(4)
(5)
(3)
Size of gross
(1)
(2)
Taxable
Percent
(6)
Taxes paid
estate
Tax returns
Taxable
returns as
of
Percent of
(in $
(in $ millions)
filed
returns
a percent
taxable
taxes paid
thousands)
of deaths
returns
All Returns
62,718
30,276
$21,510,036
1.24%
100.0%
100.0%
1.0 < 2.5
45,974
21,152
3,672,087
0.86
69.9
17.1
2.5 < 5.0
10,887
5,630
4,651,112
0.23
18.6
21.6
5.0 < 10.0
3,806
2,166
4,350,019
0.09
7.2
20.2
10.0 < 20.0
1,315
808
3,224,425
0.03
2.7
15.0
20.0 or more
736
520
5,612,394
0.02
1.7
26.1
Sources: Columns 1-3: Internal Revenue Service, Statistics of Income, Estate Tax Returns Filed in
2004 with Total Gross Estate Greater than $1 million. Unpublished data available at
[http://www.irs.gov/pub/irs-soi/04es01tc.xls]. Column 4: Estate tax returns filed in one year are
calculated as a percent of all deaths in the prior year. There were 2,448,288 deaths in the United
States in 2003; see Table 4 for source. Columns 4-6: Percentage calculations by CRS.
The largest gross estate size categories contributed a much bigger
percentage of taxes (column 6) than the percentage of taxable returns they
represented (column 5). The 520 gross taxable estates of $20 million or more
accounted for just 0.02% of decedents and 1.7% of taxable returns, but 26.1% of
estate taxes paid. The 808 gross estates from $10 million up to $20 million
accounted for just 0 .03% of decedents and 2.7% of taxable returns, but 15.0% of
taxes paid. The 2,166 gross estates from $5 million up to $10 million accounted for
0.09% of decedents and 7.2% of taxable returns, but 20.2% of taxes paid. The 5,630
gross estates from $2.5 million up to $5 million accounted for 0.23% of decedents
and 18.6% of taxable returns, and a nearly proportional 21.6% of taxes paid. In
contrast, the 21,152 gross estates from $1.0 million up to $2.5 million accounted for

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0.86% of decedents and 69.9% of taxable returns, but only 17.1% of estate taxes
paid.1
These calculations are shown on a cumulative basis in Table 2. Again, the 520
gross taxable estates of $20 million or more accounted for just 0.02% of decedents
and 1.7% of taxable returns, but 26.1% of estate taxes paid. The 1,328 gross estates
of $10 million or more accounted for 0.05% of decedents and 4.4% of taxable
returns, but 41.1% of estate taxes. The 3,494 gross estates of $5 million or more
accounted for 0.14% of decedents and 11.6% of taxable returns, but 61.3% of estate
tax revenues. The 9,124 gross estates of $2.5 million or more accounted for 0.37%
of decedents and 30.1% of taxable returns, but 82.9% of estate tax payments.
Table 2. Taxable Estate Tax Returns Filed in 2004, Cumulative
Percentages by Size of Gross Estate
Taxable
Number
Size of gross
returns
Cumulative
Cumulative
of
estate
as a
percentage of
percentage of
taxable
(in $ millions)
percentage
taxable returns
Taxes paid
returns
of deaths
20 or more
520
0.02%
1.7%
26.1%
10 or more
1,328
0.05
4.4
41.1
5 or more
3,494
0.14
11.6
61.3
2.5 or more
9,124
0.37
30.1
82.9
1 or more
30,276
1.24
100.0
100.0
Sources: See Table 1.
The average tax rate for all taxable estate tax returns filed in 2004 was 20.0%
of the gross estate, as shown in Table 3, column 4. The average tax rate in the $1
million to $2.5 million size class was 10.9%. The average gross estate in the $2.5
million to $5 million size class was $3.4 million (column 2). The average net estate
tax paid in that size class was $826,000 per taxable return (column 3), for an average
tax rate of 24.4% (column 4). The average tax rate in the $5 million to $10 million
and $10 million to $20 million gross estate size classes was 29.2% and 29.3%,
respectively. In the largest size class, over $20 million, the average gross estate was
$55.8 million. The average estate tax paid was $10.7 million, for an average tax rate
of 19.3%.
1 Estate tax returns filed in 2004 are most likely to be for the estates of decedents dying in
2003 when the exclusion amount under the estate tax was $1 million. They are also likely
to include returns of some decedents dying in early 2004 when the exclusion amount was
$1.5 million.

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Table 3. Average Gross Estate, Average Estate Taxes, and
Average Estate Tax Rate on Taxable Returns Filed in 2004, by
Size of Gross Estate
(1)
(2)
(3)
(4)
Size of gross
Aggregate
Average gross
Average net
Average tax
estate
gross estate
estate
estate tax
rate on gross
(in $ millions)
(in $
(in $
(in $
estate
thousands)
thousands)
thousands)
(%)
All Returns
$107,680,320
$3,557
$710
20.0%
1.0 < 2.5
33,681,202
1,592
174
10.9
2.5 < 5.0
19,053,979
3,384
826
24.4
5.0 < 10.0
14,910,242
6,884
2,008
29.2
10.0 < 20.0
11,002,799
13,617
3,991
29.3
20.0 or more
29,032,119
55,831
10,793
19.3
Notes: Using all tax returns (including those nontaxable) in the denominator would substantially
lower the measure of average taxes paid and average tax rate. The average tax rate is calculated as
a percentage of the gross estate, not the value of the taxable estate after deductions. Using this larger
denominator lowers the measure of the average tax rate.

Sources: Column 1: Internal Revenue Service, Statistics of Income, Estate Tax Returns Filed in 2004
with Total Gross Estate Greater than $1 million. Unpublished data available at
[http://www.irs.gov/pub/irs-soi/04es01tc.xls]. Column 2: column 1 of this table divided by column
2 of Table 1. Column 3: from Table 1, column 3 divided by column 2. Column 4: column 3 divided
by column 2.
Increases in the Applicable Exclusion Amount
The period from 1997 through 2011 marks a time of changes in the estate tax
laws brought about by the Taxpayer Relief Act of 1997 (TRA, P.L. 105-34) and the
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-
16). In particular, these two laws provided for increases in the applicable exclusion
amount under the estate tax, as shown in the first column of Table 4. EGTRRA also
provided for a gradual decrease in the maximum marginal estate tax rate, as shown
in the second column of Table 4.2
The applicable exclusion amount has two important implications. First, a
federal estate tax return must be filed if a U.S. decedent’s gross assets3 equal or
exceed the applicable exclusion amount for the year of the decedent’s death. That
is why the applicable exclusion amount is sometimes called the “tax filing
2 Taxable estate values below the maximum cutoff are subject to a table of graduated
marginal tax rates starting at 18% for the first $10,000. The lower range of marginal rates
is incorporated in the unified credit. Consequently, taxpayers are only likely to pay attention
to the marginal rate that applies above the applicable exclusion amount.
3 Including taxable gifts given during the donor’s lifetime.

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threshold.” Second, each estate tax return receives a unified transfer tax credit equal
to the tax that would be due on the applicable exclusion amount.4 Thus, the transfer
of an amount of assets up to the applicable exclusion amount is free from federal tax
for every estate. EGTRRA referred to the applicable exclusion amount as the
“unified credit effective exemption amount.” It is sometimes called the “exempt
amount” for short.
The applicable exclusion amount is not indexed for inflation. Nor is it set with
an explicit target of taxing only a certain percentage of the population, for example,
the wealthiest one or two percent. Instead, Congress has intermittently changed the
dollar amount.
From 1987 through1997 the applicable exclusion amount remained at $600,000,
under provisions of the Economic Recovery Tax of 1981 (ERTA, P.L. 97-34). The
Taxpayer Relief Act of 1997 (TRA, P.L. 105-34) phased in a relatively gradual
increase in the applicable exclusion amount from $600,000 in 1997 to $1,000,000 in
2006. The applicable exclusion amount rose to $625,000 in 1998, $650,000 in 1999,
and $675,000 for 2000 and 2001.5 In addition, the Taxpayer Relief Act provided for
the applicable exclusion amount to increase to $700,000 for 2002 and 2003,
$850,000 for 2004, $950,000 for 2005, and $1 million for 2006 and beyond.
However, before the provisions of TRA were fully phased in, they were
superseded for tax years 2002-2010 by the provisions of the Economic Growth and
Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L 107-16). EGTRRA raised the
applicable exclusion amount to $1 million beginning immediately in 2002 and 2003.
It increased the exclusion in large increments, to $1.5 million for 2004 and 2005, $2
million for 2006-2008, and $3.5 million in 2009. It repealed the estate tax and
generation-skipping transfer tax entirely for the estates of decedents dying in 2010.
But the provisions of EGTRRA will sunset on December 31, 2010. Unless new
legislation governing the estate tax is enacted beforehand, in 2011 the law will revert
to that in effect prior to June 7, 2001. The estate tax will be reinstated with an
applicable exclusion amount of $1 million, the amount that TRA had provided for
2006 and beyond, and the family-owned business deduction will be reinstated.
4 The unified credit is applied against both estate and gift tax obligations.
5 The Taxpayer Relief Act also created a new exclusion from the estate tax for qualified
family-owned businesses that was in effect from 1998 through 2003. The exclusion was
limited to a total of $1,300,000 in combination with the applicable exclusion amount. The
family-owned business exclusion was converted to a deduction by the Internal Revenue
Service Restructuring and Reform Act of 1998 (P.L. 105-206). Under EGTRRA, the family-
owned business deduction was repealed in 2004 when the applicable exclusion amount for
all estates was increased to $1,500,000. For more information, see CRS Report 95-444, A
History of Federal Estate, Gift, and Generation-Skipping Taxes, by John R. Luckey.

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Table 4. Applicable Exclusion Amount and Maximum Tax Rate
for the Estate Tax, 1988-2011
Calendar year
(In the case of estates
Applicable exclusion
Maximum tax rate for taxable estate
of decedents dying
amount
values over (in millions)
during)
1988-1997
$600,000a
55% over $3.0 plus 5% surtax from over
$10.0 to $21.040d
1998
$625,000b
55% over $3.0 plus 5% surtax from over
$10.0 to $17.184e
1999
$650,000b
“
2000
$675,000b
“
2001
$675,000b
“
2002
$1,000,000c
50% over $2.5c
2003
$1,000,000c
49% over $2.0c
2004
$1,500,000c
48% over $2.0c
2005
$1,500,000c
47% over $2.0c
2006
$2,000,000c
46% over $2.0c
2007-2008
$2,000,000c
45% over $1.5c
2009
$3,500,000c
“
2010
Estate tax repealed for 2010 onlyc
2011 and thereafter
$1,000,000b
55% over $3.0 plus 5% surtax from over
$10.0 to $17.184e
a. Provision of the Economic Recovery Tax Act of 1981 (ERTA, P.L. 97-34). The applicable
exclusion amount was $600,000 in 1987 also.
b. Provisions of the Taxpayer Relief Act of 1997 (TRA, P.L. 105-34).
c. Provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L.
107-16).
d. The Revenue Act of 1987 (P.L. 100-203) provided for a 5% surtax to offset the benefits of both
the graduated tax rates on taxable estate values below $3 million and the unified credit (or
applicable exclusion amount), such that the effective rate of tax on the entire estate was 55%.
e. As the result of a clerical error in the final text of TRA of 1997, later adopted by Congress, the
surtax was intended to offset the benefits of only the graduated tax rates, and not the unified
credit.
Relationship between the Filing Threshold
and the Number of Taxable Returns
The tax law that applies to an estate is the law in effect in the year of the
person’s death.6 However, the estate tax return is not due until nine months after the
6 Assets are typically valued at their fair market value as of the date of death. However, they
may be valued as of the “alternate valuation date” — six months after the date of death or
the date of distribution of the property from the estate if earlier. The alternate valuation date
might be elected by the executor if the assets have a lower value on that later date. For more
information, see CRS Report 95-416, Federal Estate, Gift, and Generation-Skipping Taxes:
(continued...)

CRS-7
person’s death, and an extension of six months is not uncommon. As a consequence,
estate tax returns filed in a given year are most likely to reflect the tax law in effect
in the preceding year. It has been estimated that of the estate tax returns filed for
decedents dying in a given calendar year roughly 5% are filed in the same calendar
year, 75% to 80% in the next year, and the remaining 15% to 20% in later years.7
It follows that estate tax returns filed in any given calendar year will include a
few returns of people who died in that year, mostly the returns of people who died
in the previous year, and some returns from deaths in prior years that are filing under
an extension.8 The applicable exclusion amount — or tax filing threshold — may
well differ among the years represented. For each filing year from 1998 to 2004, the
second column of Table 5 shows the applicable exclusion amount for both the prior
year (top number) and current year (bottom number).
For example, estate tax returns filed in 2001 will generally reflect a filing
threshold of $675,000, the threshold in effect for both 2000 and 2001. In contrast,
estate tax returns filed in 2002 will include mainly the returns of decedents that fall
under 2001 law when the threshold was $675,000, as well as some under 2002 law
when the effective filing threshold was $1 million. Estate tax returns filed in 2003
will generally reflect a filing threshold of $1 million, the law in effect for both 2002
and 2003. Estate tax returns filed in 2004 will generally reflect the $1 million
threshold in effect for 2002 and 2003 but also some under the $1.5 million threshold
in effect for 2004.
An increase in the applicable exclusion amount would be expected to reduce the
number of estate tax returns filed, the number of returns that were taxable, and the
amount of estate tax paid — relative to what they would otherwise be. Whether these
numbers decline absolutely depends in large part on whether the increase in the
exclusion amount outpaces the growth in the value of assets held by decedents.
As shown in Table 5, even as the filing threshold was increasing in annual
increments of $25,000 — from $600,000 in 1997, to $625,000 in 1998, $650,000 in
1999, and $675,000 in 2000 — the number of estate tax returns filed and the number
of taxable returns continued to rise. The increasing pattern holds whether measured
as absolute number of returns or as tax returns as a percentage of deaths in the prior
year (reflecting the nine-month grace period for filing returns). This suggests that
asset values were generally rising more rapidly than the filing threshold over the
1997-2000 period. The number of estate tax returns filed rose from 97,856 or 4.23%
of deaths in 1998 to 108,322 or 4.53% of deaths in 2000. The number of taxable
estates rose from 47,475 or 2.05% of deaths in 1998 to 51,999 or 2.17% of deaths in
2000.
6 (...continued)
A Description of Current Law, by John R. Luckey.
7 David Joulfaian, Estate Taxes and Charitable Bequests: Evidence from Two Tax Regimes,
unpublished research paper, Dec. 2004, p. 10.
8 Complex returns may be granted an extension longer than six months.

CRS-8
The numbers barely dipped in 2001 when the $675,000 filing threshold was
fully phased in. This suggests that the filing threshold had caught up with the growth
in asset values. But the number of returns filed dropped by 9% between 2001 and
2002 when the filing threshold increased by a much larger step, from $675,000 to $1
million. The number dropped by a noteworthy 33% in 2003 when the million dollar
threshold was fully phased in. This suggests that at the $1 million level the tax filing
threshold had moved ahead of the value of assets held by decedents in 2002.
Between 2003 and 2004 the number of returns filed dropped by just 5% as the higher
$1.5 million filing threshold began to take effect.
Between 2001 and 2003, both the total number of returns filed and the number
of taxable returns fell by approximately 40%. The total number of returns filed fell
from 108,112 to 66,042, or from 4.50% of deaths to 2.70% of deaths. The number
of taxable returns fell from 51,842 to 30,626, or from 2.16% to 1.25% of deaths.
Some of this decrease was caused by a decline in asset values, in addition to the large
increases in the tax filing threshold from $675,000 in 2000 and 2001 to $1 million
in 2002 and 2003.
The last column of Table 5 shows that the total estate tax paid generally moved
in the same direction as the number of taxable returns, with both rising from 1998 to
2000 and falling from 2000 to 2003. In percentage terms the total estate tax paid rose
more than the number of taxable returns from 1998 to 2000 (a 20% increase in taxes
compared with a 10% increase in the number of taxable returns), but dropped less
than the number of taxable returns from 2000 to 2003 (a 15% decrease in taxes
compared with a 41% decrease in taxable returns). Net estate tax paid increased
slightly from $20.7 billion in 2003 to $21.5 billion in 2004, reflecting the legislated
decline in state death tax credits.9
9 Explained later on page 13.

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Table 5. Number of Estate Tax Returns Filed, Taxable, as a
Percentage of Deaths, and Tax Paid, 1998-2004
Filing
Taxable
Total returns
threshold in
Total
returns as
Net estate
Year
Taxable
as percent of
prior and
returns
percent of
tax paid (in
filed
returns
deaths in
current year
filed
deaths in
$ billions)
prior yeara
($)
prior yeara
1998
$600,000
97,856
47,475
4.23%
2.05%
$20.3
$625,000
1999
625,000
103,979
49,863
4.45
2.13
22.9
650,000
2000
650,000
108,322
51,999
4.53
2.17
24.4
675,000
2001
675,000
108,112
51,842
4.50
2.16
23.5
675,000
2002
675,000
98,359
44,408
4.07
1.84
21.4
1,000,000
2003
1,000,000
66,042
30,626
2.70
1.25
20.7
1,000,000
2004
1,000,000
62,718
30,276
2.56
1.24
21.5
1,500,000
Sources: Data on total returns filed, taxable returns, and net estate tax paid from Internal Revenue
Service, Table 1. Estate Tax Returns Filed in [year]: Gross Estate by Type of Property, Deductions,
Taxable Estate, Estate Tax and Tax Credits, by Size of Gross Estate. Unpublished data from the
Statistics of Income (SOI) for the years 1998 to 2004. Available on the IRS website
[http://www.irs.gov/taxstats].
Deaths in 1997-2001 from U.S. Department of Commerce, Economics and Statistics
Administration, U.S. Census Bureau, Statistical Abstract of the United States, annual editions from
2000 to 2003. Deaths in 2002 from National Vital Statistics Reports, Deaths: Final Data for 2002,
vol. 53, no. 5, October 12, 2004, p. 1. Deaths in 2003 from Department of Health and Human
Services, Centers for Disease Control and Prevention, National Center for Health Statistics, Deaths:
Final Data for 2003, posted Jan. 20, 2006, available at [http://www.cdc.gov/nchs/data/hestat/
finaldeaths03_tables.pdf].
a. The total number of deaths in the United States rose slightly from year to year from 1997 through
2003, as follows:
1997
2,314,245
1998
2,337,256
1999
2,391,399
2000
2,403,351
2001
2,416,425
2002
2,443,387
2003
2,448,288

CRS-10
The number of taxable estates in each size category of gross estate above $5
million remained relatively constant across the years 1998-2004, as shown in Table
6. This stability is even more apparent in Table 7 which shows the number of
taxable estates by size category from Table 6 as a percentage of total deaths in the
previous year.10
Table 6. Number of Taxable Returns by Size of Gross Estate,
1998-2004
Size of gross
Year returns filed in
estate
(in millions)
1998
1999
2000
2001
2002
2003
2004
$0.600 < $1.0
20,106
19,136
18,634
18,198
13,026
NA
NA
$1.0 < $2.5
19,838
22,233
23,827
24,591
22,993
21,635
21,152
$2.5 < $5.0
4,633
5,212
5,917
5,551
5,049
5,505
5,630
$5.0 < $10.0
1,836
2,045
2,258
2,165
2,101
2,157
2,116
$10.0 < $20.0
688
770
814
868
755
824
808
$20.0 or more
374
467
549
469
484
504
520
Total
47,475
49,863
51,999
51,842
44,408
30,626
30,276
Sources: IRS data cited for Table 5.
The fluctuation in the total number of taxable estate tax returns as a percentage
of deaths (from 2.05 in 1998, to 2.17 in 2000, to 1.24 in 2004) is traceable to the
three smallest size categories, under $5 million. The first row of Table 7 shows how
the increase in the tax filing threshold reduced the number of taxable estates
(measured as a percentage of deaths) in the $600,000 to $1 million size of gross
estate class, at first gradually from 1998 to 2001, and then markedly in 2002 and
completely in 2003 and 2004.11 The second row of Table 7 shows how the number
10 This percentage is sometimes expressed relative to the number of adult deaths in the
previous year. The number of adult deaths (age 20 and over plus deaths for which age is
unavailable) was 97.6%-97.8% of all deaths for the years 1997 to 2002. Consequently, using
total deaths instead of adult deaths as the denominator does not make much difference in the
percentage.
11 Some estate tax returns are filed several years after the decedent’s death. In its publicly
released data for returns filed in a given year, the IRS excludes those late returns for which
the gross value of the estate was less than the filing threshold in effect for the prior calendar
year. In 2003, for example, 6,498 returns were filed with from $675,000 up to $1 million
in gross assets, of which 2,365 were taxable. These returns are not included in the publicly
released data for returns filed in 2003. This practice somewhat understates the total number
of returns filed, the number of taxable returns filed, and the amount of tax paid by the
$600,000 to $1 million gross estate size class for the 1998-2004 period examined in this
report. But it gives a closer picture of what is occurring under the tax laws most pertinent
(continued...)

CRS-11
of taxable estates in the $1 million to $2.5 million size class grew from 1998 to 2001,
reflecting a growth in asset holdings, and more than offsetting the decline in the
lowest size class. By the 2002 and 2003 filing years, however, the increase in the tax
filing threshold to $1 million (and the decline in asset values) had started to reduce
the number of taxable returns in the $1 million to $2.5 million size class. The
downward trend in this size class continued in 2004 as the $1.5 million threshold
began to take effect. The combined losses in the two smallest size classes (under
$2.5 million) caused most of the drop in the total from 2001 to 2002, and all of the
drop from 2002 to 2004. The number of taxable returns in the $2.5 million to $5
million class rose from 1998 to 2000, fell in 2001 and 2002, but rose back to its 2001
level in 2003 and 2004 (row 3), reflecting fluctuations in net asset values.
In contrast, there was a noteworthy stability in the number of taxable estate tax
returns as a percentage of deaths in the three largest size classes. For all but one of
the six years examined, estates in the $5 million to $10 million range represented
.09% of deaths (row 4), and estates in the $10 million to $20 million range .03% of
deaths (row 5). Estates of $20 million or more accounted for .02% of deaths in all
seven years (last row).
Table 7. Taxable Estates as a Percentage of Deaths by Size of
Gross Estate, 1998-2004
Size of
Year returns filed in
gross estate
(in millions)
1998
1999
2000
2001
2002
2003
2004
$0.600 < $1.0
.87%
.82%
.78%
.76%
.54%
NA
NA
$1.0 < $2.5
.86
.95
1.00
1.02
.95
.89
.86
$2.5 < $5.0
.20
.22
.25
.23
.21
.23
.23
$5.0 < $10.0
.08
.09
.09
.09
.09
.09
.09
$10.0 < $20.0
.03
.03
.03
.04
.03
.03
.03
$20.0 or more
.02
.02
.02
.02
.02
.02
.02
Total
2.05
2.13
2.17
2.16
1.84
1.25
1.24
Sources: CRS calculations of percentages based on the IRS data presented in Table 6, divided by the
number of deaths in the prior year shown in the note to Table 5. Column may not sum to total due to
rounding.
11 (...continued)
to the filing years. Returns filed several years after the decedent’s death are included as
long as the gross assets in the estate exceed the filing threshold in effect for the year prior
to filing. IRS excludes from its tabulations returns filed that were not required to be filed
because gross assets were below the filing threshold in effect for the year of death.

CRS-12
The tax filing threshold has increased to $1.5 million in 2004-2005 and $2
million for 2006-2008. The numbers presented in Tables 1 and 2 in the first section
suggest that these increases can be expected to dramatically decrease the number of
tax returns required to be filed and the number of returns that are taxable from 2005
to 2009, through their effect on the $1 million to $2.5 million size class. The decline
in estate tax revenues should be less than proportional to the decline in the number
of taxable returns. The scheduled further increase in the filing threshold to $3.5
million in 2009 is likely to moderately reduce the number of returns filed and taxable
in the $2.5 million to $5 million class between 2009 to 2010, unless it is offset by a
major increase in asset values.
Less Than Half of Estate Tax Returns Were Taxable
Many estates face the administrative burden of filing an estate tax return even
though they owe no estate tax. Just under half of estate tax returns filed each year
from 1998 through 2004 were taxable. Overall, the percentage of total returns filed
that were taxable dipped slightly from 48.5% in 1998, to 48.0% in 1999-2001, to
45.1% in 2002, and then rose slightly to 46.4% in 2003 and 48.3% in 2004, as shown
in the first row of Table 8. Compare this with the percentage of individual income
tax returns filed that were taxable: 72.8% in 2001, 69.9% in 2002, and 68.2% in
2003.12
Table 8. Percentage of Returns Taxable by Size of Gross Estate
Size of gross
Year returns filed in
estate
(in millions)
1998
1999
2000
2001
2002
2003
2004
Total
48.5%
48.0%
48.0%
48.0%
45.1%
46.4%
48.3%
$0.600<$1.0
40.5
38.4
38.9
40.0
35.4
NA
NA
$1.0<$2.5
54.5
54.5
52.7
52.0
49.6
43.5
46.0
$2.5<$5.0
60.3
60.5
59.1
56.1
51.1
52.2
51.7
$5.0<$10.0
68.9
67.1
66.7
61.0
61.1
57.8
56.9
$10.0<$20.0
72.9
72.4
72.1
67.7
63.0
63.7
61.4
$20.0 or more
83.9
80.9
78.9
74.7
72.1
70.0
70.1
Source: Percentage calculations by CRS, based on IRS sources cited for Table 5.
The computation of final net estate tax liability permits deductions from the
gross estate for certain expenses related to administering the estate (executors’
12 Internal Revenue Service, Statistics of Income Bulletin, vol. 25, no. 2, fall 2005,
Washington, D.C., Selected Historical and Other Data, Table 3, p. 286. Calculated by CRS
as 100 minus the percentage of returns showing no total income tax.

CRS-13
commissions and attorneys’ fees), funeral costs, debts and mortgages, charitable
bequests, and, most importantly, bequests to a surviving spouse. It also permits
credits against the tentative estate tax for the unified credit (equal to the tax on the
exempt amount), gift taxes previously paid, and foreign death taxes. Prior to 2002
there was a full credit for state death taxes. The credit was phased out by 25% per
year from 2002 to 2004 and converted to a deduction in 2005. It is common for the
first spouse to die to leave a substantial portion of his or her estate as a bequest to the
surviving spouse. As a result, the estate of the first spouse to die may not be subject
to tax.
As shown in each column of Table 8, for any given year, the percentage of
estate tax returns filed that were taxable increased with the size of gross estate.
Estates with a gross value just above the tax filing threshold (the applicable exclusion
amount) are required to file an estate tax return but are likely to owe little or no tax.
For tax returns filed in 2004 when the prevailing threshold was $1 million for most
and $1.5 million for some estates, the percentage of returns that were taxable was
46.0% in the $1 million to $2.5 million category, 51.7% in the $2.5 million to$5.0
million category, 56.9% in the $5 million to $10 million category, 61.4% in the $10
million to $20 million category, and 70.1% in the $20 million and over category.
As shown in each row of Table 8, with a few exceptions, the percentage of
returns that were taxable declined within each size category each year from 1998
through 2004. Between 1998 and 2004 the largest percentage point drop occurred
in the $20 million-and-over gross estate class, where the percentage of taxable returns
fell 13.8 points, from 83.9% to 70.1%. The percentage taxable also fell by from 8.5
to 12.0 percentage points for the four size categories from $1 million to $20 million.
The previously large $600,000 to $1 million class — with the lowest rate of taxability
(35.4% in 2002) — was eliminated by the rise in the tax filing threshold to $1 million
and then $1.5 million. Its removal from the calculations led the overall percentage
of taxable returns to rise from 45.1% in 2002 to 48.3% in 2004.
Estate and Gift Tax Revenues: Past and Future
This section of the report shifts to data on revenues from both estate and gift
taxes, and reported by fiscal year rather than calendar year. It looks back on actual
data for FYs 1998-2005, and forward to projections through FY2016.
Because of the nine-month grace period for filing estate tax returns, the revenues
for a particular fiscal year are most likely to reflect the tax laws in effect for the prior-
numbered calendar year. For example, revenues collected during FY2005, which ran
from October 1, 2004, until September 30, 2005, are most likely to reflect the estate
and gift tax laws in effect during calendar year 2004.
Recent Experience
Revenues from federal estate and gift taxes peaked at $29.0 billion in FY2000,
as shown in column 1 of Table 9. Revenues then began falling, in part as a result of
changes in the tax law, described previously, which substantially raised the

CRS-14
applicable exclusion amount and modestly lowered the maximum tax rate, and in part
because of a decline in asset values. Between FY2000 and FY2003 estate and gift
tax revenues fell by $7 billion or 24%, from $29.0 billion to $22.0 billion. In
FY2004, reflecting a recovery in asset values, revenues rose by 13%, back to $24.8
billion where they remained in FY2005.
Estate and gift taxes contribute a small share of total federal revenues.
Measured relative to other federal revenue sources, estate and gift tax revenues
peaked in FY1999 at 1.5% of total receipts (column 2 of Table 9) and 3.2% of
individual income tax revenues (column 3). Relative to FY2003, in FY2004 estate
and gift tax revenues rose both in absolute dollars and as a percent of total and
individual income tax revenues. In FY2005, however, the same estate and gift tax
revenues of $24.8 billion represented a low of 1.1% of total federal receipts of $2.154
trillion and 2.7% of individual income taxes of $927 billion.
Table 9. Estate and Gift Tax Revenues, Relative to Total
Revenues and Individual Income Taxes, FY1998-FY2004
Estate and gift tax revenues
Fiscal year
As a percent of
In
As a percent of total
individual income
$ billions
federal revenue
tax revenue
1998
$24.1
1.4%
2.9%
1999
27.8
1.5
3.2
2000
29.0
1.4
2.9
2001
28.4
1.4
2.9
2002
26.5
1.4
3.1
2003
22.0
1.2
2.8
2004
24.8
1.3
3.1
2005
24.8
1.1
2.7
Sources: Revenue data from U.S. Executive Office of the President, Office of Management and
Budget, Historical Tables, Budget of the United States Government, Fiscal Year 2007 (Washington:
GPO, 2006), Table 2.1, p. 30 (total receipts and individual income taxes), Table 2.5, p. 45 (estate and
gift taxes). Percentage calculations by CRS.
Gift Taxes versus Estate Taxes
The gift tax is levied on the taxable transfer of assets during the donor’s
lifetime. The gift tax is due by April 15th of the year after the gift is made. Under
the Taxpayer Relief Act of 1997 (TRA), the applicable exclusion amount for lifetime
taxable gifts plus bequests rose from $600,000 in 1997, to $675,000 million in 2001.
The same graduated tax rate structure that applied to estates applied to gifts above the
exclusion amount, on a cumulative lifetime basis. However, under the Economic

CRS-15
Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the exclusion
amount for lifetime gifts is scheduled to remain at $1 million, even as the applicable
exclusion amount rises to $3.5 million by 2009.13 Furthermore, the gift tax is
scheduled to remain in effect when the estate tax is repealed in 2010. The maximum
gift tax rate will be capped at 35% (equal to the maximum individual income tax
rate) on taxable transfers over $500,000.
Through FY2001 gift taxes accounted for a significant percentage of estate and
gift tax revenues. However, since the adoption of the Economic Growth and Tax
Relief Reconciliation Act (EGTRRA) in 2001, with its announcement of estate tax
repeal in 2010 , there has been a substantial decline in the revenue collected from gift
taxes. The last column of Table 10 shows that gift taxes accounted for 14% to 17%
of combined estate and gift tax revenues over the FY1998-FY2001 period. However,
over the FY2002-FY2004 period, gift taxes accounted for only 6% to 9% of
combined estate and gift tax revenues. Gift tax revenues fell by more than half, from
the range of $3.3 to $4.7 billion per year in FY1998-FY2001, down to the range of
$1.4 to $1.9 billion in FY2002-FY2004 (column 2 of Table 10). Forecasters predict
that gift tax revenues will remain low in the years remaining prior to FY2011 and
will be higher in FY2011, reflecting gifts made in 2010 before the return of the estate
tax in 2011.
13 Under the gift tax there is an annual exclusion per donor per donee. This exclusion
amount is indexed for inflation and rounded down to the nearest $1,000. The exclusion was
$11,000 in 2005 and is $12,000 in 2006. There is an unlimited exclusion for gifts to pay
for tuition or medical expenses or for transfers to a political organization for the use of the
organization. There is also an unlimited marital deduction for most interspousal gifts. For
more information, see CRS Report 95-444, A History of Federal Estate, Gift, and
Generation-Skipping Taxes, by John R. Luckey, and CRS Report 95-416, Federal Estate,
Gift, and Generation-Skipping Taxes: A Description of Current Law, by John R. Luckey.

CRS-16
Table 10. Estate Taxes and Gift Taxes, Net Collections,
FYs 1998-2004
($ in billions)
Estate and
Percent
Percent
Fiscal year
Estate taxes
Gift taxes
gift taxes
estate taxes
gift taxes
1998
$20.8
$3.3
$24.1
86%
14%
1999
23.0
4.7
27.7
83
17
2000
24.9
4.0
28.9
86
14
2001
24.4
3.9
28.3
86
14
2002
24.8
1.6
26.4
94
6
2003
20.0
1.9
21.9
91
9
2004
23.4
1.4
24.8
94
6
Sources: Internal Revenue Service Data Book for the fiscal years 1998-2004, Table 1: Summary of
Internal Revenue Collections and Refunds, by Type of Tax, p. 8. Available on the IRS website
[http://www.irs.gov]. Net collections are equal to gross collections minus refunds. Percentage
calculations by CRS.
CBO Revenue Projections
In January 2006 the Congressional Budget Office (CBO) released its projections
of estate and gift tax revenues for FY2006-FY2016 under current law, as shown in
Table 11. They assume growth in the value of assets over time, reflecting both real
economic growth and inflation. Starting from actual revenues of $25 billion in
FY2005, CBO projected that revenues would fluctuate in the $26-to-$29 billion
range from FY2006 through FY2009, corresponding to 0.2% of gross domestic
product (GDP). This is while the applicable exclusion amount is rising from $1.5
million for decedents dying in 2004-2005 to $2.0 million for decedents dying in
2006-2008. Reflecting the large increase in the applicable exclusion amount to $3.5
million for 2009 and the repeal of the estate tax for calendar year 2010, CBO
projected that estate and gift tax revenues would fall to $22 billion in FY2010 and
$20 billion in FY2011, corresponding to 0.1% of GDP for both years. Reflecting the
reinstatement of the estate tax in 2011 with an applicable exclusion amount of $1
million, CBO projected that estate and gift tax revenues would rise markedly to $45
billion and 0.3% of GDP in FY2012. CBO projected that estate and gift tax revenues
would remain at 0.3% of GDP for the subsequent four fiscal years, rising steadily to
$49 billion in FY2013, $55 billion in FY2014, $61 billion in FY2015, and $67
billion in FY2016.

CRS-17
Table 11. CBO Projections of Estate and Gift Tax Revenues
Through FY2016 under Current Law
Estate and gift tax revenues
Estate and gift taxes as a
Fiscal year
($ in billions)
percentage of GDP
Actual 2005
$25
0.2%
2006
28
0.2
2007
26
0.2
2008
28
0.2
2009
29
0.2
2010
22
0.1
2011
20
0.1
2012
45
0.3
2013
49
0.3
2014
55
0.3
2015
61
0.3
2016
67
0.3
Total 2007-2011
124
0.2
Total 2007-2016
402
0.2
Source: U.S. Congress, Congressional Budget Office, The Budget and Economic Outlook: Fiscal
Years 2007 to 2016, Washington, January 2006, Table 4-2, p. 84.
Treasury and JCT Revenue Loss Estimates
from Permanent Repeal
Among its revenue proposals for FY2007, the Bush Administration once again
proposed to permanently extend the provisions of EGTRRA that are scheduled to
sunset on December 31, 2010. EGTRRA’s extension would make permanent the
modifications to the gift tax and the repeal of both the estate tax and the generation-
skipping transfer tax now due to take effect for 2010 only.
In February 2006, the Treasury Department published its estimates of changes
in federal receipts expected each year from FY2006 through FY2016 if legislation
to repeal the sunset provision of EGTRRA with respect to the estate and gift taxes
were enacted in 2006, to become effective in 2011. The Joint Committee on
Taxation (JCT) released its estimates in March 2006. Both sets of estimates are
presented in Table 12.

CRS-18
The relatively modest estimated revenue losses from FY2006 through FY2010
stem primarily from a projected decline in gift tax revenues. The estimates are based
on the assumption that taxpayers would immediately begin to reduce taxable gifts
during their lifetimes if they knew that the estate tax would be permanently repealed
in 2010. In addition, the Treasury Department projected that the enactment in 2006
of permanent repeal of the estate tax (effective in 2010) would modestly affect
revenues from the individual income tax, in two different ways. First, Treasury
assumes that lifetime charitable donations and accompanying tax deductions would
fall, thereby increasing income tax revenues. Second, and larger in effect, it assumes
that capital gains realizations by the elderly would fall, thereby decreasing income
tax revenues. For all but one year in the forecast period FY2006-FY2011 Treasury
projects that net reductions in income taxes would add to the decrease in revenues
from gift taxes.14
These negative effects on gift and income tax revenues are expected to continue
from FY2011 onward if the estate tax is permanently repealed. JCT assumes further
that, following estate tax repeal, some deductions that would otherwise have been
claimed on the estate tax return will instead be claimed on the last income tax return
of the decedent, thereby reducing income tax revenues. This could include
deductions for end-of-life medical expenses and estate administration expenses. The
expected accompanying losses in income tax revenues are reflected in the fact that
each year from FY2010 on, the total revenue losses projected by both Treasury and
JCT from permanent repeal of the estate tax shown in Table 12 exceed CBO’s
estimates of estate and gift tax revenues under current law shown in Table 11.
For the years prior to full repeal of the estate tax, the Treasury Department
estimated revenue losses ranging from $1.1 billion in FY2007 to $2.7 billion in
FY2010. FY2011 reflects a period of transition from estate taxes for decedents dying
in 2009 to no estate taxes in 2010 and beyond. For FY2011 Treasury estimated a
revenue loss of $23.8 billion. For the years reflecting full repeal of the estate tax,
Treasury estimated a revenue loss of $53.1 billion for FY2012, rising annually to
$70.3 billion in FY2016. The five-year revenue loss estimate for FY2007-FY2011
is $31.4 billion. The 10-year revenue loss estimate for FY2007-FY2016 is $339.0
billion.
14 These conclusions are based on a comparison of two sets of revenue change estimates for
FY2006-FY2011 published in the U.S. budget for FY2007. See U.S. Executive Office of
the President, Office of Management and Budget, Analytical Perspectives, Budget of the
United States Government, Fiscal Year 2007 (Washington: GPO, 2006), Table 17-3, p. 265,
and Table 17-4, p. 269. According to conversations with Treasury Department analysts, the
estimates in Table 17-3, Effect of Proposals on Receipts — for making permanent the repeal
of estate and generation-skipping transfer taxes and modification of gift taxes — include the
projected effects on income taxes, in addition to the effect on estate and gift tax revenues.
These are the same estimates presented (out to FY2016) in Table 11 of this report. In
contrast, the estimates in Table 17-4, Receipts by Source — for proposed legislation, under
estate and gift taxes — include only the effects on estate and gift tax receipts. The
difference between the two series indicates the estimated effects of changes in income tax
revenues.

CRS-19
The JCT’s estimates of revenue losses are lower than the Treasury’s for the
years prior to total repeal (FY2010 and earlier), but larger than the Treasury’s for the
subsequent years reflecting total repeal. This reflects differences in their assumptions
about the baseline as well as behavioral responses. The JCT’s annual revenue loss
estimates rise from $55.7 billion in FY2012 to $78.8 billion in FY2016. The five-
year revenue loss estimate for FY2007-FY2011 is $34.1 billion. The 10-year revenue
loss estimate for FY2007-FY2016 is $369.2 billion.
Table 12. Treasury- and JCT-Estimated Revenue Changes
Through FY2016 from Acting in 2006 to Permanently Repeal
the Estate and Generation-Skipping Transfer Taxes
and Modify the Gift Tax Effective in 2010
(millions of dollars)
Joint Committee on
Fiscal year
Treasury Department
Taxation
2006
$-205
$-204
2007
-1,102
-983
2008
-1,728
-1,521
2009
-2,181
-1,199
2010
-2,676
-1,559
2011
-23,758
-29,862
2012
-53,122
-55,661
2013
-56,853
-60,166
2014
-61,562
-66,503
2015
-65,757
-72,925
2016
-70,283
-78,798
2007-2011
-31,445
-35,124
2007-2016
-339,022
-369,177
Sources: U.S. Department of the Treasury, General Explanations of the Administration’s Fiscal Year
2007 Revenue Proposals (referred to as the Bluebook), Washington, February 2006, p. 143. The
Treasury Department’s annual estimates for FY2006 to FY2011, and the cumulative five- and 10-year
estimates are also published in U.S. Executive Office of the President, Office of Management and
Budget, Analytical Perspectives, Budget of the U.S. Government, Fiscal Year 2007, Table 17-3, p.
265. U.S. Congress, Joint Committee on Taxation, Description of Revenue Provisions Contained in
the President’s Fiscal Year 2007 Budget Proposal, 109th Cong., 2nd sess., JCS-1-06 (Washington:
GPO, March 2006), p. 314.
Note: These estimates include the projected effect on individual income tax revenue, in addition to
estate and gift taxes. The JCT’s multi-year totals have been adjusted by CRS to begin in 2007 rather
than 2006, for the sake of consistency with the Treasury’s tabulations.

CRS-20
To put these numbers in some perspective, the full set of revenue proposals
presented in the Bush Administration’s FY2007 budget were estimated by Treasury
to cost $285.3 billion over the five-year period FY2007-FY2011 and $1.741 trillion
over the 10-year period FY2007-FY2016.15 The revenue loss associated with the
repeal of the estate tax and generation-skipping transfer tax and the modification of
the gift taxes represents 11.0% of the total proposed net revenue costs over the five-
year period FY2007-FY2011. It represents 19.5% of total estimated net revenue
costs for the 10-year period FY2007-FY2016. This reflects the large effects of full
estate tax repeal during the second half of the 10-year period, FY2012-FY2016.
According to the JCT’s estimates, the net cost of the full set of revenue
proposals in the Administration’s FY2007 budget would be $297.3 billion over the
five-year period FY2007-FY2011 and $1.877 trillion over the 10-year period
FY2007-FY2016.16 The estate and gift tax provisions account for 11.8% of the net
revenue losses over the five-year period and 19.7% over the 10-year period. These
percentages are slightly larger than those generated from the Treasury estimates.
For Additional Information
CRS Report 95-444. A History of Federal Estate, Gift, and Generation-Skipping
Taxes, by John R. Luckey.
CRS Report RS20593. Asset Distribution of Taxable Estates: An Analysis, by Steven
Maguire.
CRS Report RL31092. Calculating Estate Tax Liability During the Estate Tax
Phasedown Period 2001-2009, by Nonna A. Noto.
CRS Report RS20609. Economic Issues Surrounding the Estate and Gift Tax: A
Brief Summary, by Jane Gravelle.
CRS Report RL31061. Estate and Gift Tax Law: Changes Under the Economic
Growth and Tax Relief Reconciliation Act of 2001, by Nonna A. Noto.
CRS Report RL30600. Estate and Gift Taxes: Economic Issues, by Jane G. Gravelle
and Steven Maguire.
CRS Report RL32818. Estate Tax Legislation in the 109th Congress, by Nonna A.
Noto.
15 U.S. Department of the Treasury, General Explanations of the Administration’s Fiscal
Year 2007 Revenue Proposals (referred to as the Bluebook), Washington, February 2006,
p. 146.
16 U.S. Congress, Joint Committee on Taxation, Description of Revenue Provisions
Contained in the President’s Fiscal Year 2007 Budget Proposal, 109th Cong., 2nd Sess., JCS-
1-06 (Washington: GPO, March 2006), p. 317. The multi-year totals were adjusted by CRS
to begin in FY2007 rather than FY2006.

CRS-21
CRS Report RL33070. Estate Taxes and Family Businesses: Economic Issues, by
Jane Gravelle and Steven Maguire.
CRS Report 95-416. Federal Estate, Gift, and Generation-Skipping Taxes: A
Description of Current Law, by John R. Luckey.
CRS Report RS20853. State Estate and Gift Tax Revenue, by Steven Maguire.