J. Kelly Kennedy, Attorney/CPA, PLLC

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Revenue from inheritance tax is dwindling

During a presidential election year, people throughout the country evaluate the candidates and their policy proposals. This year, like many other election years, the candidates have focused a lot of their attention on discussing the economy. Usually, when a politician discusses the national economy, the topic of taxes is bound to come to the forefront. For some people in Polk County, this topic is particularly important with regard to inheritance taxes.

Although the State of Florida does not impose an inheritance tax on its residents, the federal government does have one. According to data from the IRS, however, the revenue that the federal government is collecting from the inheritance tax has bene dwindling over the years. In 2006, for example, this tax generated $24.6 billion in revenue. But by 2014, the federal government received only $16.4 billion from the inheritance tax.

A non-partisan group called the Tax Foundation reported that the inheritance tax now produces less than one percent of federal revenue. On the other hand, though, the country has had a growing number of millionaires, and even billionaires, over the past 20 years or more.

Changes in the tax code have been one of the biggest driving forces that have caused the revenue from inheritance taxes to decline so much. In addition, wealthy people have found innovative ways to shelter their estate and assets from tax liabilities like the inheritance tax.

Through trusts and other legal instruments, people can set up their estate to minimize its exposure to taxes and other costs, and thus maximize the inheritance that is available to family members or any other heirs. Even if a person's estate is not large enough that it triggers the federal estate tax liability, they can still benefit from using estate planning tools that are relevant to the circumstances of their estate.

Source: CNBC, "How the rich are paying less in estate taxes," Robert Frank, accessed on Sept. 30, 2016

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