Did you know that the federal estate tax is celebrating its 100th anniversary in September? Yes, the dreaded death tax will celebrate its centennial on September 8.

The estate tax was enacted on the heels of the first federal income tax. The estate tax was intended to create an additional revenue source as the United States prepared to enter World War I. Yet there was another reason given for the adoption of the estate tax, more than just raise revenues. This was the era of great industrialization where just a handful of men controlled concentrated wealth in America e.g. John D. Rockefeller, Andrew Mellon, and Andrew Carnegie. With the rise of Progressivism, the thought was that the estate tax would address that growing inequality in wealth. Teddy Roosevelt observed in his 1916 State of the Union address: The man of great wealth owes a peculiar obligation to the State because he derives special advantages from the mere existence of government. In other words, the very wealthy who owned property relied on the government to provide stability and to protect their property interests, much more so than did the poor who owned no property.

Interestingly, the federal gift tax came along in 1924, as a means to protect the federal estate tax as a back-stop; if the asset was given away it would not be included in the donor’s taxable estate, and no transfer tax would be incurred. The gift tax was repealed only two years later, but it was reenacted in 1932.

The estate tax over its 100 years has taken on various forms and imposed various burdens on taxpayers, seemingly changing about once every decade. For example, the first estate tax provided for an exemption of $50,000 from taxation [compared to today’s $5.45 million.] The estate tax rate ranged from 1% to 10% in 1916, with the 10% estate tax imposed on estates that were in excess of $5.0 million [compared to today’s flat tax of 40% on estates in excess of $5.45 million.]

In 1917 the federal estate tax generated $6 million of new revenues for the government. In 2014, the last year where we have accurate numbers, the federal estate tax generated $17 billion in revenue. While that 2014 number seems gigantic in comparison, placed in the context of the entire federal budget, it is a mere drop in the bucket. The revenues generated from both federal gift and estate taxes in 2015 comprised only 0.7% of all federal tax revenue [contrast to 49.8% coming from income taxes and 35.2% coming from employment taxes.]

From the mid-1930s to the mid-1950s only 1% to 2% of decedent’s estates paid any estate tax. The number peaked at 7% in 1976. With the increase in federal estate tax exemptions and the adoption of the unlimited marital deduction in the 1980s, the number of estates that faced federal estate taxation dropped to and leveled off at about 2% each year. In the early 2000s, with the Bush tax cuts, the number of estates that paid an estate tax dropped to 1%. Today, due to the large federal estate tax exemptions per taxpayer and the ability of a surviving spouse to use their deceased spouse’s unused federal estate tax exemption, aka portability, the number of decedent’s estates that actually pay a federal estate tax is down to 0.2%.

The federal estate tax was intended to be a progressive tax to assist in the redistribution of wealth in our society. That conversation continues today, only the terminology is different- the 1% need to pay their fair share! President Obama and Secretary Clinton both advocate that the taxpayer exemption amount should be reduced from $5.45 million to $3.5 million. Additionally, their position is that exemption amount should not be annually adjusted by cost-of-living, unlike today’s exemption. They want to de-link the federal estate and gift tax exemptions, which are currently unified, with the federal gift tax exemption reduced from $5.45 million to a flat $1.0 million. Finally, they believe that the current flat transfer tax rate of 40% would be increased to a flat 45%. [I would report what Donald Trump’s estate tax proposals would be, but they will probably change by next week, so it would only be a guess.]

Then there is the cynical view of federal estate taxes. Numerous articles have been written over the years that suggest that the federal estate tax, aka the infamous death tax, is so emotionally laden, that it attracts an abnormal amount of attention from political campaign donors, donors who are more apt to contribute to a candidate based upon that candidate’s formal position on transfer taxes than they are on most other campaign positions or issues. The cynic would conclude that no politician, regardless of their party affiliation, really wants to repeal the federal estate tax, since keeping the debate alive on its existence readily assures impressive campaign contributions.

My guess is that with the growing inequality of wealth in our country, the ever-increasing federal deficit, and the fact that the death tax always seems to be a hot-topic on the campaign trail, we can expect that the federal estate tax, in some form or another, will continue to be with us, perhaps for yet another 100 years.