Weekend Economists Pull Timmy Out of Well (and Throw Him Back In)May 30-June 1, 2014

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27. Over Coming Decades, Wealthy Tax Dodgers Will Deprive The Government Of Trillions Of Dollars

http://thinkprogress.org/economy/2014/05/30/3443407/estate-tax-59-trillion-wealth-transfer/



Nearly $60 trillion will change hands over the next 55 years as Americans transfer their wealth to heirs and charities, according to a newly released Boston College Center on Wealth and Philanthropy report that illustrates how the wealthy have taken a more aggressive approach to avoiding the tax man.

The report finds that Americans will pass on a total of $59 trillion over that period, but just $5.6 trillion will go to estate taxes — less than 10 percent of the total. The report assumes a 2 percent economic growth rate and the continuation of the current estate tax system put in place in early 2013. Should growth fall to just 1 percent over those years, estate tax collections would fall to less than 7 percent of total transfers.

Those numbers are so paltry in part because the wealthy have gotten increasingly aggressive and creative about avoiding estate taxes by passing wealth to their heirs before they die. About $10 trillion, or roughly 17 percent of the total wealth transfer the report forecasts, will come from “lifetime transfers” that are not subject to the estate tax.

Such “lifetime transfers” are supposed to be subject to other forms of taxation so that wealthy people can’t evade the estate tax system entirely. But the wealthiest Americans have become so adept at avoiding the other taxes that backstop the estate tax that it has become “essentially voluntary” for people of means, as Bloomberg has reported.