Estonia is a place.
The sponge tax was a US state-level estate tax linked to the calculation of the federal estate tax .. estate tax. Estate tax ( United States ). States with this tax collected the amount allowable as a tax credit to the federal estate tax if paid in state estate taxes .. estate tax. Estate tax ( United States ). In practice , this additional estate tax was levied directly at the state level but generated a tax credit against the federal tax up to a specified amount .. estate tax. Estate tax ( United States ). Under a sponge tax regime , the estate will pay no more in total federal and state estate taxes than it would have paid if there were no state estate tax .. estate tax. Estate tax ( United States ). This meant that estate planning that produced the best federal estate tax result would automatically produce the best state estate tax result .. estate tax. Estate tax ( United States ). The state estate tax gets its name because the state is `` sponging '' off the federal tax .. estate tax. Estate tax ( United States ). The 2001 Federal Tax Act phased out the federal credit , completely eliminating it in 2005 .. -LRB- The federal estate tax law did replace the credit with a much lower deduction for state estate taxes paid . -RRB-. estate tax. Estate tax ( United States ). The effect of the elimination of the federal credit has generally been the creation of state-level estate taxes to replace the lost revenue .