The federal estate tax levies a 40% rate on estates above $13.6 million per individual ($27.2M for couples). Because of the high exemption, it affects fewer than 0.1% of estates and raises roughly $25–35 billion annually — a fraction of federal revenue but significant in absolute terms.
The Double Taxation Argument
The most common argument against the estate tax is that assets have already been taxed as income when earned. This has limits. A substantial portion of estate value — appreciated stocks, real estate, business interests — has never been taxed as income. The "step-up in basis" rule means heirs receive assets with basis reset to current market value, permanently eliminating embedded capital gains that would have been owed on a sale during the decedent's lifetime. The estate tax partially offsets this significant tax benefit.
The Family Farm Argument
The concern that heirs must sell family farms to pay estate taxes is more compelling in the abstract than in practice. At the current $13.6M exemption, vanishingly few family farms trigger the tax. The American Farm Bureau has acknowledged in policy documents that very few farm estates actually owe estate tax under current law.
"The estate tax debate is conducted as if it applies to ordinary Americans who worked hard and saved. It doesn't. It applies to multi-million dollar fortunes. The family farm argument is compelling and mostly hypothetical."
The Expiration Question
The current high exemption was set by the 2017 TCJA and was scheduled to revert to roughly $7M per individual — absent congressional action. Whether Congress extends the higher exemption is one of several major tax questions dominating the current legislative agenda. The revenue implications of extension are substantial.