The term “estate tax” refers to a tax levied on a person’s entire estate at death. The tax is based on the value of the estate after deductions and credits are subtracted and applied. In addition to federal tax, states impose their own taxes on the death of a decedent.

Gross Estate: The total of all assets and interests in property owned by the deceased at his/her date of death (Refer to Form 706 PDF).

In general, the value used to calculate the estate tax is the fair market value of all the items included in the gross estate. This may include cash, securities, real estate, trusts, annuities, business interests and other items.

Marital Deduction: A tax credit for gifts made during the life of a married couple, which can be claimed against the estate tax due on the first spouse’s death. It applies if the first spouse dies within three years after the second.

Exemption: The amount of estates that do not owe the estate tax, which is set annually in legislation. The exemption amount is indexed to keep pace with inflation and the federal tax rate.

Estate Tax Compliance: The IRS and taxpayers spend about 7 percent of all estate taxes on administrative costs for calculating, filing and paying the estate tax. This is comparable to the cost of other major federal taxes.

The Effective Tax Rate: Among the few estates that owe any federal estate tax, the effective tax rate is less than 17 percent on average. This is significantly lower than the top statutory rate of 40 percent.

It would be irresponsible for policymakers to further cut revenues from an estate tax that is reducing deficits. It is also unnecessary for such cuts to come at the expense of vital programs for middle- and low-income Americans.

Charitable Giving: The estate tax indirectly reduces the price of charitable bequests by lowering the total value of the inherited wealth. In turn, this reduces the ability of decedents to allocate a large portion of their accumulated wealth to charitable purposes.

Repeal of the estate tax will likely significantly reduce charitable giving at both the lifetime and death of decedents. In particular, repeal will lower the amount of money decedents can give to their favorite charities.

These changes are especially important in a world of shrinking budgets, where the burdens of deficit reduction fall disproportionately on the shoulders of middle- and low-income Americans. They would reduce the ability of American families to afford health insurance, education and other essential programs that ensure our long-term well-being.

Moreover, repeal would reduce the generosity of donors who want to ensure that their charitable legacy is used for good, and it will likely reduce the size of foundations in America.

Despite these effects, a majority of Americans support some level of estate tax reform. The most common reasons for support are concern about the growing wealth gap, the need to address our country’s long-term fiscal challenges and the desire to promote economic growth. However, some diehard estate-tax opponents are able to stoke debates and make political football out of the most trivial arguments.