I wrote on October 3rd about how the analysis of the 1986 tax act did not distribute its corporate income tax increases, thus showing all income groups getting tax cuts even in a revenue-neutral tax reform. Now the Treasury, Joint Committee on Taxation, and Congressional Budget Office distribute corporate income tax changes to households. However, the JCT and CBO still do not distribute estate tax changes. [Fortunately, the Treasury and Urban/Brookings Tax Policy Center distributional analyses do include estate tax changes.]
Given that the eventual repeal of the estate tax in House Ways and Committee Chairman Brady's tax reform proposal accounts for 12% of its total net tax cut over ten years, and 29% of the total net tax cut in fiscal years 2025-27 when the estate tax is repealed, this is a serious omission from the JCT distribution tables.
The IRS Statistics of Income has published tables linking estate tax returns with the income tax of married decedents in the prior year, which provides important information about the income of estate taxpayers. The table above shows that decedents with taxable estates in excess of $10 million had an average income in excess of $1 million the year before their death. Decedents with taxable estates over $20 million, accounting for over half of the estate tax paid, had an average income over $4 million.
The description of the US Treasury distributional analysis, as of 2015, said that "Ninety-one percent of the estate and gift tax burden falls on the top 5 percent of families, with 43 percent on the top .1 percent of families."
In addition to the $36.6 billion of income tax cuts millionaires would receive in 2027, they would also likely get another $28 billion (73% of the total $38 billion) of estate tax reduction, for a total of $64 billion tax cut accounting for almost 40% of the proposal's total tax reduction ($156 billion) in that year. [Some might argue that heirs, rather than the decedents', income should be used in the distribution table. However, even with large families, heirs of $10+ million estates would also likely be millionaires under a Haig-Simons definition of income.]
Revenue and distribution tables are based on estimates and projections by career professional staffs. If the Congressional government staffs can distribute corporate income taxes and make 10-year revenue projections, their distributional tables can also include estimates of the distribution of estate taxes.
Tom Neubig