United for a Fair Economy released information yesterday indicating that less than one-third of one percent of all U.S. estates-- or 0.27%-- will be affected by the federal estate tax in 2006. The estate tax exemption rose January 1 from $1.5 million to $2 million ($4 million per couple).

This means that 99.73 percent of all estates in the U.S. will be able to pass 100% of their assets to their heirs tax-free. One of the major misconceptions about the estate tax is that it unfairly ensnares taxpayers with an unneccessary burden. As these numbers indicate, this is obviously not the case. The estate tax - the most progressive tax in the tax code - is levied on only the very wealthiest in society, and provides an important balance in a tax code that increasingly puts a greater tax burden on low- and middle-income earners. UFE's press release can be seen here.

It is likely the Senate will attempt to repeal the estate tax in the first few months of 2006 (the House passed a repeal bill last April). Be sure to check back on the blog for regular estate tax updates.

At their recent annual convention, delegates of the National Farm Bureau Federation voted in approval to change the organization's position on the estate tax. The organization now supports raising the estate tax exemption to $10 million (indexed to inflation), from the current $2 million. The Bureau voted on this issue because members of Congress had been pressuring the organization to state what level of exemption its members would accept. At this point, it is not clear what specific tax rate they support.