The most interesting thing about this proposal to abolish the estate tax is that it is so transparent and honest. All the malarkey about this benefiting “farmers” and “small businesses” has been mercifully dropped, and the ranking Republican in the Senate simply states the truth – this is to help rich people.
DOVER – The State Senate’s Republican Leader has introduced legislation to permanently abolish Delaware’s estate tax.
Sen. Gary Simpson (R-Milford) said Wednesday that the tax, also known as the death tax, is causing the wealthy to flee the state.
“When you have some of Delaware’s wealthiest residents moving or changing their residence to other states that do not have an estate tax you have lost potentially years of their personal income tax,” he said. “So probably the net effect is that it’s costing the state tax revenue, rather than generating tax revenue.”
The tax, which currently applies to estates valued at more than $5.12 million, was reinstated in 2009 as part of a massive tax package pushed by the Markell administration to help close an $850 million budget deficit. The tax was scheduled to expire four years later, but citing another budget shortfall, the governor proposed keeping the estate tax – and other sunsetting taxes – in place.
The Delaware Financial Advisory Council (DEFAC), the panel that sets the state’s official revenue projections, estimated the tax would generate $25 million the first full year after it was reinstated. But according to numbers provided by the Delaware Controller General’s Office, the estate tax revenue has never come close to that. After generating $16.2 million in fiscal year 2011, estate tax revenue has been in a free fall ever since, culminating with only $1.3 million earned in 2014.
“Not only is it clear that the estate tax is not generating the revenue people thought that it would, but the numbers strongly suggest that the wealthy are leaving to avoid paying this tax,” Sen. Simpson said. “We’ve seen that last year we only brought in $1.3 million in tax revenue. But how much did we lose by having those wealthier residents, who could have paid taxes for another 10, 15 or 20 years, leave the state?”
Thanks in large part to the estate tax, Delaware landed on Forbes magazine’s 2014 list of “Where Not to Die.”
“This doesn’t even take into account the goods and services they purchase, and that it’s usually the extremely wealthy who donate large amounts of money to conservation, the arts, and countless other charities,” Sen. Simpson said. “And it is possibly dissuading some people with a lot of disposable income and a lot of potential income tax from moving into Delaware.”
His assertion that wealthy people are leaving the state over taxation is, of course, pure bullshit. But leaving hypothetically abused farmers out of this was refreshing.