In January, Massachusetts Lawmaker, Shawn Dooley proposed cutting estate taxes in the Bay State in an attempt to prevent elderly citizens from moving to other states.
The Massachusetts Lawmaker revealed that if an estate is worth more than $1 million, the state levies taxes between 8 and 14 percent of that value, The Sun Chronicle reported. In order to retain a greater number of seniors – and also their assets – he is proposing increasing the exemption to $2.6 million, which would be 50 percent of the $5.2 million federal exemption.
As time goes on, he would use this formula – along with inflation indexes – to determine the exemption amount, according to the news source. The lawmaker has said that while his proposal would result in the state losing between $10 million and $15 million every year, very wealthy taxpayers are already circumventing this particular burden.
Ideally, he would eliminate the Massachusetts estate tax completely, but is aware that the state’s legislature would never approve such a motion, the media outlet reported. Currently, only 12 states have this particular revenue source.
Widespread estate tax reform
Massachusetts is not alone in thinking that estate tax reform could help
it retain its citizens, as New York State previously increased its estate tax exemption to $5 million
from $1 million, Steve Forbes noted in a Forbes article. However, this policy has an interesting caveat. If the estate is valued at more than $5 million, the tax is applied to the entire amount.
This policy could deter small business owners from remaining in the state, Forbes emphasized. This development could impact job creation, creating adverse consequences for the economy.
New York increased this exemption last year
, along with Minnesota, Rhode Island and Maryland, policy analyst Jared Meyer noted in The Fiscal Times. Many states have been changing their policies because of the resources that individuals invest into lowering their estate tax burdens, emphasized Meyer, who works at the Manhattan Institute for Policy Research.
Mass. Tax policy considerations
Amid these trends, Noah Berger, president of the Massachusetts Budget and Policy Center, told The Sun Chronicle that lowering estate taxes is not an urgent matter on Beacon Hill. To reduce the burden, state officials would have to decrease revenue that could go toward funding education and local aid.
However, State Rep. Jay Kaufman, chairman of the House Joint Committee on Revenue, has stated that the proposal is worth considering, the media outlet reported.
“Representative Dooley’s bill has merit as it encourages us to examine and consider some interesting potential changes we should consider to our tax code
,” Kaufman said in a statement, according to the news source. “The bill raises some very important questions, and should generate a thoughtful analysis and healthy debate on its merits. That’s how democracy is supposed to work. I look forward to the analysis and debate that will follow.”