For those who have a gut feeling that the richest Americans are getting richer while the rest of us are getting poorer or just treading water, the evidence is that they are right.

Not since the start of the modern Federal Estate Tax in 1916, has there been a better time to be wealthy in America.

Early in the 20th Century our country turned to the Federal Estate Tax to limit the accumulation of great wealth by a handful of families. Upon the death of a wealthy person a portion of the wealth would be paid to our Federal government as an Estate Tax, thereby limiting the amount of wealth that would pass to the decedent’s children.

Now in 2025, the Estate Tax has been so eviscerated that only 1 out of every 1,000 estates must pay any tax.

As recently as the Presidency of Ronald Reagan the Federal Estate Tax had a much wider impact on limiting the transfer of great wealth to another generation.

Part of the gulf between the top 0.1% and the rest of us has resulted from huge Federal Estate Tax cuts over the past 20 years for the wealthiest Americans.

While the lowest paid workers in America have seen the Federal Minimum Wage frozen at $7.25 since 2009, (many states still use the $7.25 minimum wage amount), the richest Americans have been treated very well by their Federal Government. They have benefitted greatly since 2009 from repeated cuts in the Federal Estate Tax.

Most Americans want their children and grandchildren to be financially successful, maybe even make it into the top 1% of America’s wealthy. But most Americans also have a feeling the truly rich in America are taking advantage of their power and influence over our Federal Government to benefit themselves and not average Americans.

President Ronald Reagan, with bi-partisan support in Congress, achieved historic tax reform in 1986. He set the top Income Tax rate at 28% for both “earned” income (wages and salaries) and “capital gain” income (profits from the sale of stock or the sale of a business). His reforms are long gone.

Under President Reagan’s tax reform, wealthy Americans owed a Federal Estate tax on estates (the money a person has at the time of death) over $600,000, an amount that continued through 1997.

Under President George W. Bush in 2009 the Federal Estate Tax exemption jumped to $3,500,000 for a single person and $7,000,000 for a married couple. 2009 was also the last year the Federal Minimum Wage was raised. The Federal Estate Tax exemption was also indexed for inflation (unlike the Federal Minimum Wage).

The $3,500,000 exemption in 2009 meant that a person could pass on that amount to family or friends without owing a dime to pay for the Army, Navy, Air Force, Marines, or Coast Guard or any other Federal Government functions.

Since 2009 the Federal Government’s tax treatment of wealthy estates has become even more generous.

Under President Trump and a Republican Congress the Federal Estate Tax exemption was doubled from roughly $5,500,000 in 2017 to $11,000,000 in 2018, and continued to be indexed for inflation. In 2025 wealthy estates are tax exempt on $14,000,000 for a single and $28,000,000 for a married couple. Had Ronald Reagan’s $600,000 Federal Estate Tax exemption in 1997 been indexed for inflation, it would have been $1,200,000 now, not $14,000,000.

At a roughly 35% Federal Estate Tax rate on the $12,800,000 increased exemption amount over the Reagan amount, the wealthiest Americans save approximately $4,500,000 in Federal Estate Taxes. For a wealthy husband and wife, the savings are doubled to approximately $9,000,000 in tax cuts.

This year, the Congress and the President somehow decided the wealthiest Americans needed the current $28,000,000 exemption for married couples raised by another $2,000,000 to $30,000,000 in 2026 and then continue to automatically rise each year by an inflation index.

As a result of the huge increase in the Federal Estate Tax exemption, instead of about 2% of estates historically having to file a Federal Estate Tax Return, now only about .01%, or 1 estate out of 1,000, owe any Federal Estate Tax.

It is ironic that for many Americans who view themselves as “moderate,” there is a longing for the “good old days” of conservative Ronald Reagan’s tax policies.

Fred Larson is a graduate of the Princeton University Woodrow Wilson School of Public and International Affairs, Yale Law School, was a private practice attorney in Chautauqua County 38 years and is a retired Jamestown City Court judge.