Dying just got cheaper for wealthy Americans. Following the passing of Donald Trump’s landmark tax bill last week, only those with assets of more than $15mn will be subject to the federal estate tax — often known as the “death tax” by those who would rather not be subject to it. For couples, the allowance is $30mn.
The rise in that threshold over time is testament to the skill with which the well-heeled work the US political system. At the turn of this century, an American did not even need to be a millionaire to face the death tax. In 2001, the exemption level was just $675,000. The newly calibrated level thus gives an implied, annualised growth rate of nearly 15 per cent, well above inflation. Compared with the UK, it is extraordinarily generous.
Relaxing estate taxes is, on the face of it, a bold choice for a country riven with serious wealth polarisation, a dire fiscal deficit and a colossal wealth transfer imminent as baby boomers stride deeper into their golden years. The median US life expectancy of around 80, burnished by various equity bull markets, could produce a $124tn wave of inheritance over the next 25 years, according to Cerulli Associates, a research firm.