In late April I posted an entry about Dan Duncan being the first billionaire to pass in 2011. The result of his passing was that the Internal Revenue Service will not be able to collect in the neighborhood of $4 billion in estate taxes from his estate.

The New York Times has recently printed an article that explains about Duncan’s estate, the history of the estate tax, and what the future holds regarding this issue.

The article points out that the estate tax was enacted in 1916. The rate of tax has varied, but when John Rockefeller died in 1937, the estate tax rate was 70%. While the estate tax rate has varied, 2010 marks the first time since 1916 that there has not been an estate tax.

The estate tax is responsible for a small percentage in the amount of revenue that the federal treasury collects. In 2008 that amount was $25 billion. Many wealthy do sophisticated estate planning which includes more than a living trust and will. It is not clear to me whether Mr. Duncan had done sophisticated estate/tax planning although no one has indicated that he had.

The fact that there is not an estate tax does not mean that Uncle Sam will never see any money. When the assets are sold, capital gains tax will be paid based upon the difference of the selling price and the price by which Mr. Duncan acquired the asset. As the capital gains tax rate is increased, that will make up for some of the difference in the lost tax.