CRS Reports on Gift and Estate Tax Revenue

The question of whether to permanently repeal the federal estate tax or to reform it remains a topic of congressional interest. This report presents a variety of data measuring the payment of estate and gift taxes to help inform the debate.

The most recent IRS data are for estate tax returns filed in 2003. They show that the 3,486 gross estates of $5 million or higher accounted for just 11.4% of taxable returns, but 59.8% of estate taxes paid.

This is a period of changing estate tax laws. The Taxpayer Relief Act of 1997 (TRA, P.L. 105-34) provided for a gradual increase in the exempt amount under the estate tax from $600,000 for 1997 to $1 million in 2006. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16) superseded those changes and raised the exempt amount to $1 million for 2002 and 2003, $1.5 million for 2004 and 2005, $2 million for 2006 through 2008, and $3.5 million for 2009. EGTRRA repealed the estate tax entirely for 2010, but the estate tax provisions of EGTRRA sunset on December 31, 2010. Unless new legislation governing the estate tax is enacted, the estate tax will be reinstated in 2011 with an exempt amount of $1 million.

Both the number of taxable returns and total estate tax paid continued to rise from 1998 to 2000, as increases in asset values outpaced the $25,000 yearly increases in the applicable exclusion amount from $600,000 to $675,000. But the number of taxable returns dropped by 41% and estate tax payments fell by 15% between 2000 and 2003 as the exempt amount increased to $1 million and some asset values fell. Taxable estate tax returns filed in 2003 represented just 1.25% of deaths in 2002.

From 1998 through 2003 the rising exempt amount eliminated a large number of smaller estates ($600,000 up to $1 million in gross size) from being taxable. In contrast, the number of larger taxable estates (the three classes over $5 million in gross size) remained relatively constant over the same period.

Revenues from federal estate and gift taxes peaked at $29.0 billion in FY2000. Between FY2000 and FY2003 revenues fell by 24% to $22.0 billion. However, in FY2004 revenues rose by 12% to $24.8 billion. Estate and gift tax revenues were 1.3% of total federal revenue and 3.1% of individual income tax revenue in FY2004.

CBO has projected estate and gift tax revenues through FY2015 under current law, with annual revenues of $52 billion or 0.3% of GDP in FY2014. The Treasury Department has estimated revenue losses through FY2015 from permanent repeal of the estate and generation- skipping transfer taxes and modifying gift taxes starting in 2010. Treasury shows revenue losses of $557 million to $2.2 billion per year primarily from reduced gift taxes in FY2006-FY2010 and losses of $51-to-$62 billion per year from forgone estate and gift tax revenues in FY2012-FY2015.

This report will be updated as new data become available.

 Contents

The first section of the report presents the most recent distributional data available from the Internal Revenue Service (IRS), for estate tax returns filed in 2003. It shows the amount of estate tax paid by each of five categories of size of gross estate, both separately (Table 1) and cumulatively (Table 2).

The second section of the report describes the substantial increases in the applicable exclusion amount (or exempt amount) under the estate tax scheduled from 1997 through 2009, the repeal of the estate tax scheduled for 2010, and the reinstatement of the estate tax with a lower exempt amount in 2011 if no changes are made to current law. It also presents the scheduled decrease in the maximum marginal estate tax rate (Table 3).

The third section of the report examines the relationship between the increase in the applicable exclusion amount (or filing threshold) and the number of estate tax returns that were filed and taxable, as well as the total amount of tax paid, from 1998 through 2003 (Table 4). The total number of taxable returns rose between 1998 and 2000 and then fell dramatically in 2002 and 2003. It looks beneath the totals to trace the differing patterns of the number of taxable returns by size of gross estate, in both absolute numbers (Table 5) and measured as a percentage of deaths (Table 6).

The fourth section reveals that less than half of estate tax returns filed from 1998 through 2003 were taxable (Table 7). It shows that the percentage of taxable returns was higher, the larger the gross estate size class. It points out the downward trend in the percentage of taxable returns within each size class from 1998 through 2002.

The fifth section of the report presents data on actual estate and gift tax revenues collected from FY1998 through 2004, comparing them to total federal revenues and revenues from individual income taxes (Table 9). It presents the January 2005 Congressional Budget Office (CBO) projection of revenues from estate and gift taxes from FY2006 through FY2015, under current law (Table 10). It also presents estimates published by the Treasury Department in February 2005 of revenue losses from FY2006 through FY2015 if the sunset provision of EGTRRA were removed in 2005, thereby permanently repealing the estate tax and generation skipping transfer taxes and modifying the gift tax effective in 2010 (Table 11).

The largest gross estate size categories contributed a much bigger percentage of taxes (column 6) than the percentage of taxable returns they represented (column 5). The 505 gross taxable estates $20 million or more accounted for just 0.02% of decedents and 1.6% of taxable returns, but 25.1% of estate taxes paid. The 824 gross estates from $10 million up to $20 million accounted for just 0 .03% of decedents and 2.7% of taxable returns, but 14.3% of taxes paid. The 2,157 gross estates from $5 million up to $10 million accounted for 0.09% of decedents and 7.0% of taxable returns, but 20.4% of taxes paid. The 5,505 gross estates from $2.5 million up to $5 million accounted for 0.23% of decedents and 18.0% of taxable returns, and a nearly proportional 21.9% of taxes paid. In contrast, the 21,635 gross estates from $1.0 million up to $2.5 million accounted for 0.89% of decedents and 70.6% of taxable returns, but only 18.3% of estate taxes paid.¹

                    Table 1. Estate Tax Returns

         Table 2. Taxable Estate Tax Returns Filed in 2003,

The applicable exclusion amount has two important implications. First, a federal estate tax return must be filed if a U.S. decedent's gross assets³ equal or exceed the applicable exclusion amount for the year of the decedent's death. That is why the applicable exclusion amount is sometimes called the "tax filing threshold." Second, each estate tax return receives a unified transfer tax credit equal to the tax that would be due on the applicable exclusion amount.⁴ Thus, the transfer of an amount of assets up to the applicable exclusion amount is free from federal tax for every estate. EGTRRA referred to the applicable exclusion amount as the "unified credit effective exemption amount." It is sometimes called the "exempt amount" for short.

The applicable exclusion amount is not indexed for inflation. Nor is it set with an explicit target of taxing only a certain percentage of the population, for example, the wealthiest one or two percent. Instead, Congress has intermittently changed the dollar amounts.

From 1987 through 1997 the applicable exclusion amount remained at $600,000, under provisions of the Economic Recovery Tax of 1981 (ERTA, P.L. 97-34). The Taxpayer Relief Act of 1997 (TRA, P.L. 105-34) phased in a relatively gradual increase in the applicable exclusion amount from $600,000 in 1997 to $1,000,000 in 2006. The applicable exclusion amount rose to $625,000 in 1998, $650,000 in 1999, and $675,000 for 2000 and 2001.⁵ In addition, the Taxpayer Relief Act provided for the applicable exclusion amount to increase to $700,000 for 2002 and 2003, $850,000 for 2004, $950,000 for 2005, and $1 million for 2006 and beyond.

However, before the provisions of TRA were fully phased in, they were superseded for tax years 2002-2010 by the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L 107-16). EGTRRA raised the applicable exclusion amount to $1 million beginning immediately in 2002 and 2003. It increased the exclusion in large increments, to $1.5 million for 2004 and 2005, $2 million for 2006-2008, and $3.5 million in 2009. It repealed the estate tax and generation-skipping transfer tax entirely for the estates of decedents dying in 2010. But the provisions of EGTRRA will sunset on December 31, 2010. Unless new legislation governing the estate tax is enacted beforehand, in 2011 the law will revert to that in effect prior to June 7, 2001. The estate tax will be reinstated and the applicable exclusion amount will be $1 million, the amount that TRA had provided for 2006 and beyond.

        Table 3. Applicable Exclusion Amount and Maximum Tax

As a consequence of the time lag in filing, estate tax returns filed in any given calendar year will include a few returns of people who died in that year, mostly the returns of people who died in the previous year, and some from prior years that are filing under an extension.⁸ The applicable exclusion amount -- or tax filing threshold -- may well differ among the years represented. For each filing year from 1998 to 2003, the second column of Table 4 shows the applicable exclusion amount for both the prior year (top number) and current year (bottom number).

For example, estate tax returns filed in 2001 will generally reflect a filing threshold of $675,000, the threshold in effect for both 2000 and 2001. In contrast, estate tax returns filed in 2002 will include returns of decedents that fall under 2001 law when the threshold was $675,000, as well as under 2002 law when the effective filing threshold was $1 million. Estate tax returns filed in 2003 will generally reflect a filing threshold of $1 million, the law in effect for both 2002 and 2003.

An increase in the applicable exclusion amount would be expected to reduce the number of estate tax returns filed, the number of returns that were taxable, and the amount of estate tax paid -- relative to what they would otherwise be. Whether these numbers decline absolutely depends on whether the increase in the exclusion amount outpaces the growth in the value of net assets held by decedents.

As shown in Table 4, even as the filing threshold was increasing in annual increments of $25,000 -- from $600,000 in 1997, to $625,000 in 1998, $650,000 in 1999, and $675,000 in 2000 -- the number of estate tax returns filed and the number of taxable returns continued to rise. The increasing pattern holds whether measured as absolute number of returns or as tax returns as a percent of deaths in the prior year (reflecting the nine-month grace period for filing returns). This suggests that net asset values were generally rising more rapidly than the filing threshold over the 1997-2000 period. The number of estate tax returns filed rose from 97,856 or 4.23% of deaths in 1998 to 108,322 or 4.53% of deaths in 2000. The number of taxable estates rose from 47,475 or 2.05% of deaths in 1998 to 56,322 or 2.17% of deaths in 2000.

The numbers barely dipped in 2001 when the $675,000 filing threshold was fully phased in. This suggests that the filing threshold had caught up with the growth in asset values. But the number of returns filed dropped by 9% between 2001 and 2002 when the filing threshold was increasing by a much larger step, from $675,000 to $1 million. And the number dropped by another 26% in 2003 when the million dollar threshold was fully phased in. This suggests that at the $1 million level the tax filing threshold had moved ahead of the net value of assets held by decedents in 2003.

Between the peak in 2000 and 2003, the total number of returns filed and the number of taxable returns fell by approximately 40%. The total number of returns filed fell from 108,322 to 66,044, or from 4.53% of deaths to 2.70% of deaths. The number of taxable returns fell from 52,000 to 30,626, or from 2.17% to 1.25% of deaths. Some of this decrease was caused by a decline in asset values, in addition to an increase in the tax filing threshold from $650,000 to $1 million.

The last column of Table 4 shows that the total estate tax paid generally moved in the same direction as the number of taxable returns, with both rising from 1998 to 2000 and falling from 2000 to 2003. In percentage terms the total estate tax paid rose more than the number of returns from 1998 to 2000 (a 20% increase in taxes compared with a 10% increase in the number of taxable returns), but dropped less than the number of returns from 2000 to 2003 (a 15% decrease in taxes compared with a 41% decrease in taxable returns).

Where did the big changes in the number of taxable estates occur? The number of taxable estates in each size category of gross estate above $5 million remained relatively constant across the years 1998-2003, as shown in Table 5. This stability is even more apparent in Table 6 which shows the number of taxable estates by size category from Table 5 as a percentage of total deaths in the previous year.⁹

   Table 4. Number of Estate Tax Returns Filed, Taxable, as a

Deaths in 1997-2001 from U.S. Department of Commerce, Economics and Statistics Administration, U.S. Census Bureau, Statistical Abstract of the United States, annual editions from 2000 to 2003. Deaths in 2002 from National Vital Statistics Reports, Deaths: Final Data for 2002, Vol. 53, No. 5, October 12, 2004, p. 1.

  Table 5. Number of Taxable Returns by Size of Gross Estate,

In contrast, there was a noteworthy stability in the number of taxable estate tax returns in the three largest size classes. For all but one of the six years examined estates in the $5-up-to-$10 million range represented .09% of deaths (row 4), and estates in the $10-up- to-$20 million range .03% of deaths (row 5). Estates of $20 million or more accounted for .02% of deaths in all six years (last row).

 Table 6. Taxable Estates as a Percentage of Deaths by Size of

Less Than Half of Estate Tax Returns Were Taxable

Many estates face the administrative burden of filing an estate tax return even though they owe no estate tax. Just under half of estate tax returns filed each year from 1998 through 2003 were taxable. Overall, the percentage of total returns filed that were taxable dipped slightly from 48.5% in 1998, to 48.0% in 1999-2001, to 45.1% in 2002, and then rose slightly to 46.4% in 2003, as shown in the first row of Table 7. Compare this with 75% of individual income tax returns filed for 2000 being taxable and 70% for 2002. ¹¹

The computation of final net estate tax liability permits deductions from the gross estate for certain expenses related to administering the estate (executors' commissions and attorneys' fees), funeral costs, debts and mortgages, charitable bequests, and, most importantly, bequests to a surviving spouse. It also permits credits against the tentative estate tax for the unified credit (equal to the tax on the exempt amount), gift taxes previously paid, and foreign death taxes. Prior to 2002 there was a full credit for state death taxes. The credit was phased out from 2002 to 2004 and converted to a deduction in 2005. It is common for the first spouse to die to leave a substantial portion of his or her estate as a bequest to the surviving spouse. As a result, the estate of the first spouse to die may become nontaxable.

For any given year, the percentage of estate tax returns that were taxable increased with the size of gross estate. Estates with a gross value just above the tax filing threshold (the applicable exclusion amount) are required to file an estate tax return but are likely to owe little or no tax. For tax returns filed in 2003 when the prevailing threshold was $1 million, 43.2% of returns in the $1- up-to-$2.5 million category were taxable, 52.2% in the $2.5-up-to- $5.0 million category, 57.8% in the $5-up-to-$10 million category, 63.7% in the $10-up-to-$20 million category, and 70.0% in the $20 million and over category.

In general, the percentage of returns that were taxable declined within each size category between 1998 and 2003. The largest percentage point drop occurred in the $20 million and over gross estate class, where the percentage of taxable returns fell from 83.9% in 1998 to 70.0% in 2003. Between 2002 and 2003 there was a slight increase in the taxable percentages for the $2.5-up-to-$5 million and the $10-up-to-$20 million class. In addition, the large $0.600-up- to-$1 million class -- with the lowest rate of taxability (35.4% in 2002) -- was eliminated by the rise in the tax filing threshold to $1 million. As a result, the overall percentage of taxable returns rose slightly from 45.1% in 2002 to 46.4% in 2003.

      Table 7. Percentage of Returns Taxable by Size of Gross

Because of the nine-month grace period for filing estate tax returns, the revenues for a particular fiscal year are most likely to reflect the tax laws in effect for the prior numbered calendar year. For example, revenues collected during FY2003, which ran from October 1, 2002, until September 30, 2003, are most likely to reflect the estate and gift tax laws in effect during calendar year 2002.

Recent Experience

Revenues from federal estate and gift taxes peaked at $29.0 billion in FY2000, as shown in column 1 of Table 8. Revenues then began falling, in part as a result of changes in the tax law, described previously, which substantially raised the applicable exclusion amount and modestly lowered the maximum tax rate, and in part because of a decline in asset values. Between FY2000 and FY2003 estate and gift tax revenues fell by 24% to $22.0 billion. In FY2004, however, revenues rose by 12%, back to $24.8 billion, just above their FY1998 level, reflecting a recovery in asset values.

Estate and gift taxes contribute a small share of total federal revenues. Measured relative to other federal revenue sources, estate and gift tax revenues peaked in FY1999 at 1.5% of total receipts (column 2 of Table 8) and 3.2% of individual income tax revenues (column 3). In FY2003, they reached a low of 1.2% of total federal receipts and 2.8% of individual income taxes. In FY2004, estate and gift tax revenues of $24.8 billion represented 1.3% of total federal receipts of $1.880 trillion and 3.1% of individual income tax receipts of $809 billion.

    Table 8. Estate and Gift Tax Revenues, Relative to Total

The gift tax is levied on the taxable transfer of assets during the donor's lifetime. The gift tax is due by April 15th of the year after the gift is made. Under the Taxpayer Relief Act of 1997 (TRA), the applicable exclusion amount for lifetime taxable gifts plus bequests rose from $600,000 in 1997, to $675,000 million in 2001. The same graduated tax rate structure that applied to estates applied to gifts above the exclusion amount, on a cumulative lifetime basis. However, under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the exclusion amount for lifetime gifts is scheduled to remain at $1 million, even as the applicable exclusion amount rises to $3.5 million by 2009.¹² Furthermore, the gift tax is scheduled to remain in effect when the estate tax is repealed in 2010. The maximum gift tax rate will be capped at 35% (equal to the maximum individual income tax rate) on taxable transfers over $500,000.

Through FY2001 gift taxes accounted for a significant percentage of estate and gift tax revenues. However, since the adoption of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) in 2001, with its announcement of estate tax repeal in 2010, there has been a substantial decline in the revenue collected from gift taxes. The last column of Table 9 shows that gift taxes accounted for 14% to 17% of combined estate and gift tax revenues over the FY1998-FY2001 period. However, over the FY2002-FY2004 period, gift taxes accounted for only 6% to 9% of combined estate and gift tax revenues. Gift tax revenues fell by more than half, from the range of $3.3 to $4.7 billion per year in FY1998-FY2001, down to the range of $1.4 to $1.9 billion in FY2002-FY2004 (column 2 of Table 9). Forecasters predict that gift tax revenues will remain lower than otherwise expected in the years prior to FY2011 and be higher in FY2011, reflecting gifts made in 2010 before the return of the estate tax in 2011.

     Table 9. Estate Taxes and Gift Taxes, Net Collections,

In January 2005 the Congressional Budget Office (CBO) released its projections of estate and gift tax revenues for FY2006-FY2015 under current law, as shown in Table 10. They assume growth in the value of assets over time, reflecting both real economic growth and inflation. Starting from actual revenues of $25 billion in FY2004, CBO projected that revenues would fluctuate in the $24-to-$27 billion range from FY2005 through FY2009, corresponding to 0.2% of gross domestic product (GDP). This is while the applicable exclusion amount is rising from $1.0 million for decedents dying in 2002-2003, to $1.5 million in 2004-2005, and to $2.0 million in 2006-2008. Reflecting the large increase in the applicable exclusion amount to $3.5 million for 2009 and the repeal of the estate tax for calendar year 2010, CBO projected that estate and gift tax revenues would fall to $21 billion in FY2010 and $19 billion in FY2011, corresponding to 0.1% of GDP for both years.

Reflecting the reinstatement of the estate tax in 2011 with an applicable exclusion amount of $1 million, CBO projected that estate and gift tax revenues would rise markedly to $43 billion in FY2012, returning to 0.2% of GDP. For the subsequent three fiscal years, CBO projected estate and gift tax revenues rising to 0.3% of GDP: $46 billion in FY2013, $52 billion in FY2014, and $58 billion in FY2015.

   Table 10. CBO Projections of Estate and Gift Tax Revenues

Among its revenue proposals for FY2006, the Bush Administration once again proposed to permanently extend the provisions of EGTRRA that are scheduled to sunset on December 31, 2010. EGTRRA's extension would make the modifications to the gift tax and the repeal of the estate tax and the generation-skipping transfer tax permanent for 2010 and beyond. In February 2005, the Treasury Department estimated a revenue loss of $51 billion for FY2012, rising annually to $62 billion in FY2015. The 10-year revenue loss estimate for FY2006- FY2015 was $256 billion. See Table 11.

The estimated revenue losses of $557 million to $2.2 billion per year for the years before FY2011 stem primarily from a projected decline in gift tax revenues if the sunset clause is repealed in 2005. The estimates are based on the assumption that taxpayers would immediately begin to reduce taxable gifts during their lifetimes if they knew that the estate tax would be permanently repealed in 2010. FY2011, with estimated revenue losses of $22 billion, reflects a period of transition from estate taxes for decedents dying in 2009 to no estate taxes in 2010 and 2011.

In addition to the effects on estate and gift tax revenues, the Treasury Department projects that the enactment in 2005 of permanent repeal of the estate tax (effective in 2010) would affect revenues from the individual income tax, in two different ways. First, Treasury assumes that lifetime charitable donations and accompanying tax deductions would fall, thereby increasing income tax revenues. Second, they assume that capital gains realizations would fall, thereby decreasing income tax revenues. For FY2006- FY2008, they project that increases in income taxes would slightly cushion the decreases in gift taxes. For FY2009 and FY2010, they project that reductions in income taxes would add to the annual decreases in gift taxes.¹³

       Table 11. Department of the Treasury Estimated Revenue

CRS Report RS20593. Asset Distribution of Taxable Estates: An Analysis, by Steven Maguire.

CRS Report RL31092. Calculating Estate Tax Liability During the Estate Tax Phasedown Period 2001-2009, by Nonna A. Noto.

CRS Report RS20609. Economic Issues Surrounding the Estate and Gift Tax: A Brief Summary, by Jane Gravelle.

CRS Report RL31061. Estate and Gift Tax Law: Changes Under the Economic Growth and Tax Relief Reconciliation Act of 2001, by Nonna A. Noto.

CRS Report RL30600. Estate and Gift Taxes: Economic Issues, by Jane G. Gravelle and Steven Maguire.

CRS Report 95-416 A. Federal Estate, Gift, and Generation-Skipping Taxes: A Description of Current Law, by John R. Luckey.

CRS Report RS20853. State Estate and Gift Tax Revenue, by Steven Maguire.

² Taxable estate values below the maximum cutoff are subject to a table of graduated marginal tax rates starting at 18% for the first $10,000. The lower range of marginal rates is incorporated in the unified credit. Consequently, taxpayers are only likely to pay attention to the marginal rate that applies above the applicable exclusion amount.

³ Including taxable gifts given during the donor's lifetime.

⁴ The unified credit is applied against both estate and gift tax obligations.

⁵ The Taxpayer Relief Act also created a new exclusion from the estate tax for qualified family-owned businesses that was in effect from 1998 through 2003. The exclusion was limited to a total of $1,300,000 in combination with the applicable exclusion amount. The family-owned business exclusion was converted to a deduction by the Internal Revenue Service Restructuring and Reform Act of 1998 (P.L. 105-206). Under EGTRRA, the family-owned business deduction was repealed in 2004 when the applicable exclusion amount for all estates was increased to $1,500,000. For more information, see CRS Report 95- 444, A History of Federal Estate, Gift, and Generation- Skipping Taxes, by John R. Luckey.

⁶ Assets are typically valued at their fair market value as of the date of death. However, they may be valued as of the "alternate valuation date" -- six months after the date of death or the date of distribution of the property from the estate if earlier. The alternate valuation date might be elected by the executor if the assets have a lower value on that later date. For more information, see CRS Report 95-416, Federal Estate, Gift, and Generation- Skipping Taxes: A Description of Current Law, by John R. Luckey.

⁷ David Joulfaian, Estate Taxes and Charitable Bequests: Evidence from Two Tax Regimes, unpublished research paper, Dec. 2004, p. 10.

⁸ The routine period of extension is six months. Complex returns may be granted a longer extension.

⁹ This percentage is sometimes expressed relative to the number of adult deaths in the previous year. The number of adult deaths (age 20 and over plus deaths for which age is unavailable) was 97.6 to 97.8 percent of all deaths for the years 1997 to 2002. Consequently, using total deaths instead of adult deaths does not make much difference in the percentage.

¹⁰ Some estate tax returns are filed several years after the decedent's death. In its publicly released data for returns filed in a given year, the IRS excludes those late returns for which the gross value of the estate was less than the filing threshold in effect for the prior calendar year. In 2003, for example, 7,086 returns were filed with from $600,000 up to $1 million in gross assets, of which 2,676 were taxable. These returns are not included in the publicly released data for returns filed in 2003. This practice understates the total number of returns filed, the number of taxable returns filed, and the amount of tax paid by the $0.6-up-to- $1 million gross estate size class for the 1998-2003 period examined in this report. IRS also excludes returns filed that were not required to be filed because gross assets were below the filing threshold in effect for the year of death.

¹¹ Internal Revenue Service, Statistics of Income Bulletin, Summer 2004, Washington, D.C., Selected Historical and Other Data, Table 3, p. 250.

¹² Under the gift tax there is an annual exclusion of $11,000 (in 2005) per donor per donee. This exclusion amount is indexed for inflation, and rounded down to the nearest $1,000. There is an unlimited exclusion for gifts to pay for an individual's tuition or medical expenses. There is also an unlimited marital deduction for most interspousal gifts. For more information, see CRS Report 95-444 A, A History of Federal Estate, Gift, and Generation-Skipping Taxes, by John R. Luckey, and CRS Report 95-416, Federal Estate, Gift, and Generation-Skipping Taxes: A Description of Current Law, by John R. Luckey.

¹³ These conclusions are based on a comparison of two sets of revenue change estimates for FY2005-FY2010 published in the U.S. budget for FY2006. See U.S. Executive Office of the President, Office of Management and Budget, Analytical Perspectives, Budget of the United States Government, Fiscal Year 2006, (Washington: GPO, 2005), Table 17-3, p. 296, and Table 17-4, p. 300. According to conversations with Treasury Department analysts, the estimates in Table 17-3, Effect of Proposals on Receipts -- for making permanent the repeal of estate and generation-skipping transfer taxes and modification of gift taxes -- include the projected effects on income taxes, in addition to the effect on estate and gift tax revenues. These are the same estimates presented in Table 11 of this report (out to FY2015). In contrast, the estimates in Table 17-4, Receipts by Source -- for proposed legislation, under estate and gift taxes -- include only the effects on estate and gift tax receipts. Comparing the two series suggests the estimated effect of changes in income taxes.