The Estate Tax Gap

163 Tax Notes 1479

5 Pages Posted: 22 Jul 2019 Last revised: 25 Jul 2019

See all articles by Calvin H. Johnson

Calvin H. Johnson

University of Texas at Austin - School of Law

Date Written: June 3, 2019


The Internal Revenue Code provides that all property transferred by reason of death shall be included in the gross estate whether the property is real or personal, tangible or intangible and wherever located. The IRS Statistics of Income, however, indicates that estate and gift tax reaches only 25% of the IRS would expect to collect if wealth transferred at death were included in full in the gross estate. The paper uses calculations based on the Saez and Zucman statistics of wealth, and defends those statistics as the best for estate tax purposes. The rest or 75% of value is lost to undervaluation of the property transferred. The articles suggests some simple steps to combat undervaluation, including ignoring temporary restrictions the decedent has added to the property to suppress its supposed value, and delaying the valuation date until the decedent’s retained interest have expired. But the talent of the estate planning bar is such that we should not expect full and fair valuation of property transferred by reason of death.

Keywords: Estate tax

JEL Classification: H20, H26

Suggested Citation

Johnson, Calvin Harsha, The Estate Tax Gap (June 3, 2019). 163 Tax Notes 1479. Available at SSRN:

Calvin Harsha Johnson (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1306 (Phone)
512-232-2399 (Fax)

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