Gov. Paul LePage has again proposed the elimination of the estate tax, saying it is bad tax policy and discourages Mainers from retiring in the state.
A public hearing on the idea is reviving familiar arguments on both sides of the debate.
LePage says taxing a small-business owner or farmer’s wealth that has been built up over many years is bad tax policy. He dislikes the tax so much he calls it the death tax, because it doesn’t happen until someone dies. LePage says it encourages wealthy Mainers to retire in other states that don’t tax estates and that hurts the state in many other ways.
That theme was echoed by Finance Commissioner Richard Rosen in his testimony before the Legislature’s Taxation Committee.
“Maine not only loses significant income tax revenue from these former residents but other benefits that these individuals provide in retirement such as donations to Maine charities and, more importantly, continued civic engagement,” he says.
And the bill’s sponsor, Rep. Stedman Seavey, a Republican from Kennebunkport, says lawmakers should have repealed the tax when they had the chance. As far as he is concerned the estate tax amounts to at least double taxation.
“The estate tax penalizes individuals for being successful and taxes assets that have already been taxed when earned and in some cases they have already been subjected to a previous estate tax when inherited from a prior descendant,” he says.
Maine has reduced its taxes on estates significantly since LePage was first elected. The threshold for taxing inherited property was doubled from a $1 million to $2 million dollars in 2013. Last year the Legislature increased the threshold again to $5.5 million.
Sarah Austin of the Maine Center for Economic policy, a liberal-leaning think tank, says enough is enough.
“The estate tax helps fund education, health care and infrastructure that keeps our economy strong and competitive and it provides a pathway to prosperity for all Mainers regardless of the circumstances of their birth,” she says. “Eliminating Maine’s estate tax would jeopardize these pillars of our economy and further divide the wealthiest from the rest of Mainers.”
Maine Revenue Services has estimated there are only a few dozen Maine families that have estates that would be taxed under current law. But as the wealthiest of Mainers, they would generate an estimated $18 million a year in estate taxes.
The Taxation Committee was scheduled to discuss the bill, but tabled it until next week. In the meantime, top Democrats on the committee released a statement blasting the proposal, calling it a giveaway to the super-rich. They sided with the Maine Center for Economic Policy, saying the measure would take away money needed for essential state services.
Currently Maine is one of 18 states in the country that have some kind of estate or inheritance tax.
