Each individual has a $2 million exemption from the federal estate tax, which will soon increase to $3.5 million. Also, it's possible to give away substantial amounts during your lifetime, and take other steps to reduce the estate tax.
So, with proper planning, only families with substantially more than $4 million (soon to be $7 million) are subject to the federal estate tax. The statistic of 1 to 2% is about right (might be a bit high, actually).
In addition, when you die, your assets receive a stepped up basis for income tax purposes, which means that all of your unrealized capital gains escape the capital gains tax forever.
Interestingly, the Republican's proposed estate tax "repeal" would have actually increased taxes on families with estates of up to $4 million in order to benefit families with more than $4 million. But, they forgot to mention that when they were trying to justify estate tax repeal.
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