The “Death Tax”

You've probably heard politicians rail against the "death tax" — the idea that when you die, the government swoops in and takes your family's money. It sounds terrifying. It's also almost entirely made up.

The reality is that the federal estate tax only kicks in on the portion of an estate that exceeds fifteen million dollars — that's thirty million for a married couple. This means 99.93 percent of Americans will never owe a single penny. This is not a tax on regular people. It is a tax on dynastic wealth.

But what about family farms? You hear that one a lot. In 2022, according to the USDA, a grand total of eighty-seven farm estates in the entire country owed any federal estate tax. And even those families can spread their payments over fifteen years at low interest rates.

The family farm argument isn't a policy concern — it's a talking point designed to protect billionaire heirs. The estate tax raises real revenue and is the only thing standing between us and a permanent aristocracy. Calling it the "death tax" was one of the most successful branding campaigns in political history. Don't fall for it.

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The current exemption: $15 million. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently set the federal estate tax exemption at $15 million per individual ($30 million for married couples using portability), effective January 1, 2026. The exemption is indexed for inflation beginning in 2027. The 40% federal estate tax rate applies only to amounts exceeding the exemption. The OBBBA made this permanent — there is no sunset provision. (Tax Foundation; Arnold & Porter; Charles Schwab)

99.93% of Americans will never owe it. Under the TCJA's ~$13M exemption, the Tax Policy Center estimated that only about 0.07% of estates owed any federal estate tax — approximately 4,100 estates per year. With the higher $15M exemption under OBBBA, even fewer estates will be subject to the tax. The 99.93% figure is conservative. (Tax Policy Center; CBPP)

87 farm estates. In 2022, according to USDA data analyzed by the Economic Research Service, a total of 87 farm estates in the entire United States owed any federal estate tax. These estates can elect to spread payments over 15 years at favorable interest rates under IRC Section 6166. The "family farm" argument has been a central talking point against the estate tax for decades, despite affecting fewer than 100 farms per year. Under the $15M OBBBA exemption, even fewer farm estates will owe tax. (USDA ERS; Americans for Tax Fairness)

The "death tax" branding. Republican strategist Frank Luntz recommended in the 1990s that Republicans stop calling it the "estate tax" and start calling it the "death tax" to build public opposition. The strategy was explicitly described in his memo "Language of the 21st Century": "It's the Death Tax, not the Estate Tax or the Inheritance Tax, because the public perceives the 'Estate Tax' as a tax on the wealthy." The rebranding was enormously successful — polling consistently shows that opposition to the "death tax" is 10-15 points higher than opposition to the "estate tax," even though they're the same tax. (NPR; Politico)

What the estate tax actually raises. The estate tax generates approximately $20-25 billion per year in federal revenue. With the OBBBA's higher exemption, revenue may decrease. The tax functions as the primary check on dynastic wealth accumulation — without it, the wealthiest families can compound inherited wealth across generations with no tax event at all (especially combined with the stepped-up basis provision, which eliminates capital gains at death).

Related PM scripts: Buy, Borrow, Die (the stepped-up basis is the "die" step), The Stepped-Up Basis (detailed explanation), The 50-Year Experiment (broader inequality context)