The estate tax is paid by the richest families. In 2008, according to estimates by the Urban Institute's Tax Policy Center, the wealthiest 1 percent of households paid over 80 percent of the $23 billion the tax raised; the top tenth of a percent alone accounted for 46 percent of the total.
Thus, approximately 50% of the tax is paid by 1 in 1,000 estates.
Although the estate tax is repealed, heirs will pay capital gains taxes on appreciation of the assets received through inheritance if and when they sell the assets.
The gift tax "carry-over basis" rules apply to inherited assets, meaning the heirs also inherit the decedent's basis.
Note: There is a complicated scheme to increase the basis on certain assets, approximating the $3.5 million exemption that applied in 2009.
The federal capital gains rate is currently 15%, but increases to 20% in 2011. Most states levy a separate capital gains tax.
So while the Steinbrenner clan may escape a $500 million estate tax, they could be liable for $200 million or so in capital gains taxes in the future.
Not all billionaires are opposed to the estate tax. Warren Buffet and Bill Gates, Sr. believe that those born in the U.S. have huge societal advantages that make their fortunes possible.
Buffet call it "winning the game of ovarian roulette." Gates also credits American society for the ability to earn a fortune and argues that society has a just claim, via the estate tax, on those assets.
Congress needs to enact a realistic and fair estate tax law. Individual exemptions of $3.5 million and a top tax rate of between 35% and 45% would eliminate the estate tax on 999 of 1,000 estates and still recover 50% of the tax.
If Congress does nothing, billionaires dying in 2010 will totally escape the tax, but starting in 2011 those with estates of more than $1.0 million will face steep tax levies.