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Home Publications Blogs Beat the Press Estate Tax: Can You Say "Marginal Rate?"

Estate Tax: Can You Say "Marginal Rate?"

Wednesday, 21 July 2010 07:19

Market Place radio did a segment on the estate tax this morning and neglected to tell listeners that the tax is a marginal rate that only applies to the value of an estate above a cutoff. It also got the pre-Bush tax cut rate wrong.

Therefore when it told listeners that the estate tax will revert to the 2001 level next year if nothing is done, it likely left them hugely confused about the tax rate. The piece said that estates of more than $1 million would face a 55 percent tax rate. This would have led listeners to believe that an estate worth $1.1 million would face a tax liability of $605,000.

In fact, the first million would face no tax liability and the next $100,000 would be taxed at a 37 percent rate, making the total liability $37,000.


Comments (7)Add Comment
let them listen to bach
written by frankenduf, July 21, 2010 8:05
actually, this point is moot- nobody listening to NPR makes a mill- rich people are in the backseat on the blackberry while the chauffer cranks up the hip hop
Marketplace and today's NY Times
written by Robert Harper, July 21, 2010 9:34
Thanks for pointing this out. Marketplace is part of the GOP propaganda machine on NPR (no longer "National Public Radio"). I turn the channel as soon as it comes on; it is filled with nonsense and misinformation put forth as news.

Speaking of which, would you please make a post explaining the misinformation in today's NY Times article about the Maine pension system? It repeatedly describes the Social Security System as a retirement plan, which it is not. It is an insurance system, not a 401(k) equivalent/replacement, and it supports much more than just retired people.
written by izzatzo, July 21, 2010 12:33
A marginal tax assessed
On change in total estate

But the margin is the whole
So there is no escape

First dollar or last
Matters not to NPR

The objective of objective reporting
Is to report the taxes that are

Taxing the rich to enrich the poor
Whether average, marginal or progressive

By stupid liberals with no estates
Whose only skills are suppressive
Of course they got it wrong...
written by DCDan, July 21, 2010 2:04
It's pretty absurd to think poeple would be for cutting the estate tax if they understood the truth.

You have to misinform the dummies, to get them on your side!
written by floccina, July 21, 2010 2:52
This would have led listeners to believe that an estate worth $1.1 million would face a tax liability of $605,000.

Almost nobody with close to $1 million would be fooled into thinking that and people with less than $1 million probably will not worry about it.
Cui bono?
written by Scott ffolliott, July 21, 2010 4:27
Cui bono?
written by Robert, July 27, 2010 12:21
The word "marginal" is also almost never mentioned when brokers are touting the advantages of tax free vs taxable bonds, etc. They just say "What bracket are you in..." How many people are misled by this as well?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.