By Thomas Fletcher – – Tuesday, April 14, 2015
With the federal budget debate underway in Washington, both political parties are certainly sparring over different fiscal visions for the country. There is, however, a chance for rare bi-partisan agreement: repealing the federal death tax.
This unpopular tax has long had an adverse impact on small, family business owners who want the next generation to continue the family legacy. Currently, the federal government seizes over 40 percent of an individual’s estate when they die. While the President wants to destroy so many of those legacies and raise taxes, Congress has the chance to go in a different direction.
Federal lawmakers should look to the states for guidance. While twenty-one of them carry an additional death tax on their books, many states have reformed and in some cases eliminated the death tax in recent years. States such as Oklahoma, Ohio, and North Carolina simply abolished their death taxes. Other states like New York have raised their exemption to match current federal law, although the New York exemption is a phase-in and will match the federal level by 2019.
Supporters often claim that the death tax is vital for revenue, but in reality it is a poor way for a state to raise revenue and has led people to leave a given state. According to a study by the Ocean State Research Institute, the death tax was the primary factor in residents leaving Rhode Island. The study found 107,086 or (one in ten) residents left the state between 1991 and 2009. While the state collected $341.3 million in estate tax receipts, it lost over $500 million in other taxes due to people migrating to other states.
Let us start with the state o NJ it is the worst as far as death taxes go.