Recently, many netizens are very interested in the inheritance tax in the United States. We have not yet imposed inheritance tax in China, but we are not sure that we will learn from the United States and other to increase this tax in the future. How high is the inheritance tax in the United States?
There are many articles on the Internet that introduce the US inheritance tax. I read it basically exaggeratedly. The most exaggerated way is that the inheritance of American citizens only needs to be paid for the inheritance tax if the inheritance exceeds $1 million, and the tax rate is as high as 40%. According to this calculation, the inheritance of $1 million can only be passed on to future generations 600,000 US dollars. "Evil Capitalism" is truly worthy of its name.
If we copy the US inheritance tax system, then the owner of a slightly better house in Beijing, Shanghai and Shenzhen will have to pay the inheritance tax after his death. The heirs can't afford it without millions of cash, so they can only sell the house and pay the tax after cashing out.
However, if you think about it carefully, you have to pay a 40% inheritance tax of 1 million US dollars. Is it a bit exaggerating. Could it be that the "experts" online made a mistake?
With questions, I checked the introduction of inheritance tax on the website of the US Taxation Bureau (IRS) and found that this is indeed not the case. In fact, most American families do not even have the qualifications to pay inheritance tax, and does not have that many assets at all.
The inheritance tax in the United States is divided into federal inheritance tax and state inheritance tax. The former is aimed at all regions in the United States, while the latter is only aimed at areas with state inheritance tax. Currently, there are only 13 of the 50 states in the United States and Washington, DC in a total of 51 regions. In other words, the remaining 38 states only have federal inheritance tax, so in most cases, it is enough to pay attention to federal inheritance tax.
The federal estate tax in the United States is related to the two figures of 1 million US dollars and 40%, but it is not that the inheritance circulating online is subject to a 40% tax of more than 1 million US dollars.
federal inheritance tax has a threshold. Taxes are required only if the total amount of inheritance exceeds the threshold. And the tax is paid in part that exceeds the threshold. Not all inheritances are subject to tax.
IRS will announce the federal estate tax threshold for that year every year. Generally speaking, with the development of the economy, the threshold is getting higher and higher. The threshold for the US federal estate tax in 2022 is US$12.06 million (about RMB 86.83 million) for a single person. If it is based on a couple, the threshold standard will double to US$24.12 million.
In other words, even according to the single-person standard, only if the total amount of inheritance left after death exceeds $12.06 million will be involved in federal estate tax. There is no need to pay taxes unless this standard.
Although there are many rich people in the United States, the middle class's annual income is between 100,000 and 300,000 US dollars, and the low-income people's annual income is even lower. It is difficult to accumulate assets of more than 12 million US dollars without eating or drinking in their lifetime. Therefore, only a very small number of rich people in the United States are eligible to pay federal inheritance tax, and this thing cannot be paid just by wanting to pay.
So how much inheritance tax should Americans pay for those who are able to pay tax standards? This depends on the total inheritance amount. The gap is very large. The federal inheritance tax rate adopts an excess progressive tax rate system. There are 12 levels in total, and the tax rates from low to high are 18%, 20%, 22%, 24%, 26%, 28%, 30%, 32%, 34%, 37%, 39%, and 40%, respectively.
The $1 million and 40% mentioned above appear here, which specifically means that the part after the total estate exceeds the threshold of $1 million is taxed at a 40% tax rate.
For example, when Zhang San died, he left a $13.5 million estate. The federal estate tax threshold in 2022 is $12.06 million, and the part that needs to be paid for is 13.5 million-12.06 million = 1.44 million. The part within of which is less than $1 million is levied at a tax rate of 18% to 39%, and the part that exceeds $1 million is levied at a tax rate of 440,000 for more than $1 million is levied at a tax rate of 40%.
The federal inheritance tax calculation formula for the inheritance left by Zhang San is as follows: the part within
11 million is paid in total US$345,800; the $440,000 above
21 million is taxed at a 40% tax rate, which is 440,000 * 40% = 176,000;
3. The total estate tax that Zhang San needs to pay = 345,800 + 176,000 = 521,800 US dollars, and the $5,521,800 ,521,800 only accounts for 3.87% of the total inheritance amount of $13.5 million, which is not much.
Of course, if Zhang San is a billionaire, the situation will be different.
Assuming that the inheritance left by Zhang San is worth US$100 million, which is higher than the threshold of US$87.94 million. The part within US$1 million still bears US$345,800 in taxes, and the remaining US$86.94 million that needs to be paid is paid at the highest tax rate of 40%, which is US$34.776 million. The total inheritance tax to be paid by
is as high as US$35.1218 million, accounting for 35.12% of the total inheritance of US$100 million, which is very close to 40%. In fact, the higher the total inheritance, the closer the proportion is to 40%.
After talking about federal estate tax, let’s talk about state estate taxes in 13 regions.
In the past, many states in the United States had levied regional inheritance tax, but the state government found that the more taxes the state was collected, the less unwilling the American tyrants to set up camp in their states and transfer their main assets to areas without state inheritance tax, which was not conducive to local economic development and attractiveness to talents. Therefore, fewer and fewer areas were levied to state inheritance tax. Although some states had been levied, they were constantly raising the threshold and lowering the tax rate.
13 regions that collect state estate taxes are the highest tax rate of 20%, and there are several of them with a threshold of more than $5 million. Of course, there are also two states who charge more severely. The thresholds of Massachusetts and Oregon are only $1 million. However, the economy of these two states is not very good, and there are basically no local tyrants, so they cannot collect much state estate tax.
What we really need to worry about is billionaires. Faced with the highest tax rate of 40%, a nearly half of the assets "contributed" to the government. In the long run, wealth will be difficult to pass on.
However, American tyrants will not sit still and wait for death. They have various ways to avoid inheritance tax, such as establishing family trust , establishing charitable foundations, purchasing life insurance, etc., and passing on more property to the next generation through various "sexy operations". The actual inheritance tax paid is far lower than the amount corresponding to their wealth.
This is also why American tycoons like to set up charitable foundations. Setting up their own charitable foundations and donating some money is more important than bringing a good reputation, and tax avoidance.
Finally, as long as you do not live in two "special" states (the state inheritance tax threshold is only $1 million), there are very few American families who need to pay inheritance tax. Family members living in most parts of the United States that only have federal inheritance tax cannot even meet the threshold for the inheritance tax. The single-person tax threshold of $12.06 million has blocked most people outside.
The rich who need to pay high inheritance tax will use various means to minimize tax expenditures, so both ordinary Americans and rich people are not as unable to inherit wealth as some people imagine.
or above is purely personal opinion. Welcome to follow and like @Wang Wu talks about . Your support is the best encouragement for originality!
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