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Figure concerning what GOP's calls 'death tax' has validity

The statement

What Republicans call the "death tax" is the estate tax "on the ultra wealthy" which, in 2016, was paid by only "two out of every 1,000 people."

U.S. Rep. Mark Pocan, D-Wis., Oct. 18 in an interview

The ruling

Republicans who are proposing to eliminate the estate tax do use the "death tax" term.

The Internal Revenue Service tells us the estate tax "is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death" — including cash and securities, real estate, insurance, trusts, business interests and other assets.

In 2016, the year cited in Pocan's claim, an unmarried individual's estate was potentially taxable only if the estate's value exceeded $5.45 million. (The value had to exceed $10.9 million to be taxable, if there was a surviving spouse.) After deductions, such estates generally are taxed at 40 percent.

IRS figures show there were 12,411 estate tax returns filed in 2016 — but a tax was owed on only 5,219 of them. And the nonprofit Urban Institute-Brookings Institution Tax Policy Center makes a similar estimate for 2017: 5,460 estates owing a tax.

In 2016, those 5,219 estates paid a total estate tax of $18.3 billion.

Since annual estate tax filings include deaths that occur in previous years, the Tax Policy Center says that each year, there are roughly 5,000 estates that pay the federal estate tax out of roughly 2.6 million deaths each year.

That comes to two of every 1,000.

Chris Edwards, director of tax policy studies at the libertarian-leaning Cato Institute, told us there are other points to consider regarding the estate tax, saying:

"The estate tax affects far more people than the relatively small number who pay. Many people who own businesses and/or investments have to spend a lot of time and money on lawyers/accountants planning to avoid it. A substantial portion of the life insurance industry exists only to avoid the estate tax. And, indeed, that is an important criticism: it is one of the most inefficient taxes in the sense that the ratio of paperwork/avoidance to tax collections is very high.?…

"The estate tax is antisaving and antiinvestment. It encourages wealthy folks to consume their wealth before death because, if the rate is high, they don't want the government to grab it. For the rest of us, it would be better if wealthy people kept their money invested in the economy, because that spurs growth. It's better for us if the wealthy hold large pools of savings rather than going out and buying expensive cars and yachts. A high estate tax rate encourages them to go out and buy expensive cars and yachts, which does nothing for long term economic growth."

We rate the statement True.

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