Journey Of Federal Estate Tax In United States

The federal estate tax in United States has a long history to its credit. This tax has been revived and abolished a number of times in the time period of more than two centuries. In the recent scenario as well, the law remains on the tops of list, containing issues for debate between the ruling government and the opposition. The Tax Plans refurbished every year have a long discussion on enacting or abolishing this federal law. The following discussion will make you familiar with the journey of this law till date.

The Stamp Act

It was in the year 1797 that the first Federal Estate Tax law was issued by the government. The law came to be known as the Stamp Law. The main purpose of enacting this law was to accumulate funds for the country’s war against France. The war was declared implicitly and thus, required immediate funds for all necessary warfare and entertaining all related tasks. However, the law remained in action for five years and was abolished in the year 1802.

The Revenue Act

The year 1862 saw the reappearance of the Federal Estate Law and this time it came to be known as the Revenue Act. The main aim of enforcing this law was to collect funds for the ongoing Civil War in the country. This time, the law remained intact for a longer time of 8 years and was finally repealed in the year 1870.

The War Revenue Act

Again, the federal estate law saw its existence in the year 1898 and again, the purpose of this law was to entertain the funds for another war fought by the country. The law was titled as the War Revenue Act and it was passed for funding the Spanish American War. The law was shortly abolished after a time period of four years in 1902.

Estate Law For World War

Finally, it was in the year 1917 that the Revenue Act was passed with a purpose to bear the cost of the First World War. And then, the law was never abolished again. This law is carried on till date in one form or the other. Though, there had been constant debates and discussions to abolish the law, it still exists in country.

The exclusion amount has always been on a rise with existence of this law in the country. For instance, it reached the value of $1.5 million from $1 million in 2004. However, the Estate Tax rate has been witnessed to fall, as evident from the statistics of year 2003, when the rate fell from 50% to 49%.

The estate tax has always been unfavorable for the country residents and only a careful Estate Planning can save your property from deductions implied by this law.