Maine Rep. Benjamin Collings of Portland held a press conference last week to boost support for LD 420, a bill he’s sponsoring that would undo a tax cut established under former Governor Paul LePage that raised the estate tax exclusion from $1 million to $5.6 million for individuals and $11.2 million for married couples.
Under LD 420, the threshold would be reduced to $2 million. In other words, Collings thinks that Mainers, who already pay some of the highest taxes in the nation on the income and wealth they accumulate during their lifetimes, should pay more taxes when passing their estates onto family members upon death.
The estate tax – also known as the death tax – has a dark record of closing family farms and other small businesses once their owners pass away. After the death of a loved one, families are sometimes forced to sell their entire businesses or significantly reduce capital equipment to pay the estate tax liability, oftentimes resulting in the loss of private sector jobs.
According to the Maine Center for Economic Policy, a liberal think tank headquartered in Augusta, reducing the exclusion to $2 million would result in $14 million in new revenue for state government. Beacon, a project of the Maine People’s Alliance, said these funds could “pay for some of the policy priorities left unfunded after last session’s budget making process.”
State government spending grew by $800 million in the budget approved by lawmakers last session, yet that is not enough for radical advocates who think there’s no problem big government cannot solve with your hard-earned tax dollars.
“There’s no such thing as a tax cut,” Rep. Collings said at the press conference last week. “When we don’t have enough case workers, when schools are still underfunded, this is one of the fairest taxes to ensure everyone is on an equal playing field. And for wealthy people, especially those that inherited massive amounts of wealth that they did not earn, that needs to go back into society.”
Maine is among a minority of states that still enforce the death tax. According to the Tax Foundation, only 12 states and the District of Columbia currently levy an estate tax on their residents while five others impose gift and inheritance taxes. Maryland is the only state that imposes both. Wealth goes where it is welcome, and the vast majority of states understand the negative impacts of the estate tax and have opted to eliminate it entirely from their tax codes.
Maine’s Taxation Committee held a work session on LD 420 on March 5 and produced a divided report. The bill will likely be subject to floor votes in the coming weeks.
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