Final answer:
The U.S. estate tax is imposed on inheritances exceeding a significant value, affecting just a small percentage of wealthy individuals. The 2015 threshold was $5.43 million. There is also a gift tax to prevent tax avoidance before death.
Step-by-step explanation:
The estate tax is a federation taxation system levied on the transfer of property as a part of inheritance. In the United States, the estate tax only impacts a small fraction of the population, specifically those whose inheritances exceed a certain high-value threshold.
For instance, in 2015, the estate tax was imposed only on estates valued over $5.43 million, as reported by the Center on Budget and Policy Priorities. This is a reflection of a broader intention to limit wealth transfer via inheritance. Similar to the estate tax, the gift tax is applied to transfers of wealth during an individual's life, as a measure to prevent avoidance of the estate tax through pre-death transfers.
However, it is important to note that the estate tax applies only to those leaving inheritances of more than $5.43 million (in 2015) and thus applies to only a tiny percentage of those with high levels of wealth.