03/11/2016 11:42 AM EST
For Immediate Release: Friday, March 11, 2016 Contact: Adrienne Bennett, Press Secretary, 207-287-2531
Majority report supports governor’s proposal to eliminate Maine’s estate tax
AUGUSTA – The Maine Legislature’s Joint Standing Committee on Taxation voted 7-6 on Thursday in favor of Governor LePage’s proposal to eliminate Maine’s estate tax.
LD 1622, sponsored by Rep. Stedman Seavey (R-Kennebunkport) and cosponsored by Sen. Earle McCormick (R-Kennebec), repeals the estate tax starting on January 1, 2017.
“I am encouraged by the Tax Committee’s vote and hope their colleagues in the House and Senate will give this proposal serious consideration,” said Governor LePage. “Maine’s death tax is killing our chances at prosperity. We now have an opportunity to eliminate the death tax as 32 other states have done and send a clear message that we want people to stay in Maine or move back from states where there is no estate tax.”
Governor LePage first called for the elimination of the estate tax as part of his January 2015 biennial budget submission, proposing to conform to the federal estate tax exemption for 2016 and eliminating the estate tax in 2017. The Legislature voted to conform with the federal estate tax exemption amount in 2016, but stopped short of eliminating it, prompting Governor LePage to introduce this stand-alone bill.
With estimated collections of $14.4 million for deaths occurring in 2016, Maine’s estate tax is no longer a significant source of revenue when compared to taxes such as the income tax, sales tax and property tax. Revenue from the tax is notoriously unreliable and difficult to predict. Just as importantly, the Office of Tax Policy estimates that Maine would only need to retain or attract 400 individuals in order to collect the same amount of tax revenue.
“Mainers with significant liquid assets only need to change their residency to escape our oppressive estate tax,” said Governor LePage. “Our business owners and farmers, who have fixed assets in Maine, are the ones that retain their residency and whose families are burdened by the estate tax.”
Liquid assets include savings, investments and other items that are not fixed within Maine are easily protected by changing residency to a non-estate tax state. Fixed assets include land, buildings and business equipment, which are difficult to transfer ownership without incurring significant legal costs.
Clark Granger, vice president of the Maine Farm Bureau, who appeared before the committee in his personal capacity, provided compelling testimony to the committee about how Maine farmers are tied to the land they own and are unable to avoid Maine’s estate tax. As a result, farm families are often hit by the estate tax as ownership transfers from one generation to the next.
In 2013, the last year of complete data, a total of 78 non-residents and 91 residents were required to pay the estate tax. The non-resident returns had a tax liability of $1.7 million. The resident returns had a total tax liability of $25.8 million.
Following the repeal of Tennessee’s inheritance tax at the beginning of 2016, Maine is one of only 18 states that have some form of estate or inheritance tax. Most of those states are located in the Northeast and Midwest.
Mar 11 2016