“Confiscatory and ill-spent taxes, including its estate tax, have forced a flight of wealth from the State. While other states enjoyed population growth, Maine’s population stagnated and grew poorer. While citizens of all political leanings agree that the total tax burden is far too high, dysfunction in State government prevents reform.” – A Declaration of Fundamental Expectations of the Citizens of Maine
They say the only things in life that are guaranteed are death and taxes. But, what about the death tax?
In 2001, the United States Congress passed the Economic Growth and Tax Relief Reconciliation Act, which changed the way the death tax, or the estate tax, was applied in America. Prior to this legislation, every state used the federal death credit as its estate tax, making the tax equivalent in each state.
But the changes to federal law in 2001 mandated that each state create its own death tax or repeal death and inheritance taxes entirely. Since 2001, 32 states have repealed the estate tax and other taxes on inheritances.
Maine may soon become the 33rd state to abolish this tax.
Governor Paul LePage unveiled new legislation on Tuesday that would effectively eliminate the death tax in the state of Maine. The death tax is a tax assessed by the government when ownership of property transitions to someone new after the original owner’s passing.
“You are taxed throughout your life on what you earn, what you buy, and what you sell. With ObamaCare, you are taxed just for being alive. It’s seems only reasonable that Maine should join the majority of states in this country that allow you to leave a nest egg for your loved ones without taxing it when you die,” LePage said in a press release.
The legislation, sponsored by Rep. Stedman Seavey (R-Kennebunkport), and co-sponsored by Sen. Earle McCormick (R-Kennebec), would become effective on Jan. 1, 2017 if approved by the Maine Legislature. Maine is currently just one of 18 states with a death tax, which needlessly adds to the tax burden felt by the citizens of our state.
Gov. LePage first tried to end the death tax in Maine when he released his 2014 biennial budget. The governor asked the Maine Legislature to conform to the federal estate tax exemption in 2016, then completely eliminate the tax in 2017. The legislature only approved conforming with the federal estate tax exemption amount that year, and so LePage is pushing his policy reform the rest of the way.
When LePage took office for the first time in Maine, the estate tax in Maine applied to inheritances valued over $1 million dollars, and only on the value of inheritance over $1 million was taxed. In 2013, with Democrats in possession of both the House and Senate, that threshold expanded to $5.5 million, with taxes only being assessed on the value of estates over that mark.
But why the government needs any fraction of what you and your family worked hard for is truly unexplainable. The estate tax was created simply for government to expand their budgets and spend more of your hard earned money. It truly serves no specific purpose, other than giving elected officials more money to fund some of our most useless government programs.
Keeping the death tax in place makes no sense for Maine. Our state is a lively tourist attraction for many older, out-of-state business and property owners. Their investment in our state is crucial to Maine’s tax base. The nest egg they leave for their loved ones shouldn’t be smaller simply because the mindless liberal politicians in Augusta want to collect a tax on someone’s passing. The only people with any right to these inheritances are the ones they’re willed to, or to the next of kin.
Additionally, local business owners who built their brand from the ground up shouldn’t be giving any share of their creation to the government when they pass away. When loved ones are lost and someone new must step in to take control of the company, this is when families that own and operate businesses become most vulnerable. The message we’re sending to them now is that the government is entitled to a portion of their hard work, which is a misguided message that only deters businesses and retirees from coming to Maine. Businesses and property owners already pay taxes on what they own. There’s no need for an additional tax just because of a switch in ownership.
The governor’s move to abolish the death tax will dissolve another pointless tax from the people of Maine, and it ensures families of businesses and property owners that they will fully acquire what legally belongs to them.
It also shows Mainers that while death and taxes are still guaranteed, the death tax doesn’t have to be.
To view the Governor LePage’s announcement, click here.