Simpson (Guilelessly) Proposes Repealing Delaware Estate Tax
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.
I’m all for it – if you substitute it with a new tax bracket at the top that actually taxes the income of the wealthy at a rate higher than their middle class neighbors. Our current structure already benefits the wealthy enough. Of course, they are the one’s who donate the most to Republican campaigns, so it makes sense they would worry about their concerns most of all.
Absolutely not bullshit. If I had $5M plus to give to my kids & knew that the state would seize a big chunk of it it off to Florida (or almost everywhere else) we go. People take the seizure of their life’s work very seriously.
I was actually quite serious in my comment. If we taxed the income more fairly, there would be no need or desire to retax it upon inheritance. It would raise more revenues on the whole and keep the wealth in Delaware. Let’s be honest, most of the people with that much money know how to get around estate and other taxes anyway.
If you actually had $5 million, you’d probably have the common sense to put it in a trust, which is all anyone has to do to avoid the tax. I see no reason to abolish a tax simply because some Republicans are too stupid to avoid it.
Yeah. There is no mystery surrounding why receipts trend down over time. The accountants and lawyers who are this tax’s true beneficiaries will have a say, and this proposal will quietly die on the vine.
I’m just glad the 10 people this would apply to finally have a voice in this state. Up to now it’s only been corporations that have been able to skirt around paying taxes.
Sir, I applaud your frankness and brazen outright ability to perpetuate the american version of a nobility.
Florida has had no income tax for the last 100 years.
In radef16’s world, the wealthy don’t leave the Northeast over income taxes. They’d only leave due to a tax that gets paid after they’re croaked. Really?
Facts are those of us making a good living gave up on the State when they raised income taxes to 5.95%. Moving to PA was well worth it.
Tom Kline’s post underscores my point. People who change addresses based on taxes don’t care about “death taxes.”
Pennsylvania’s inheritance tax levy reaches far deeper and broader than Delaware’s.
Enjoy your $15k property tax bill, Tom.
And that sales tax that ain’t just chump change.
YOU ARE RIGHT ON TARGET JOANNE CHRISTIAN, SALES TAX, EVERY ONE PAYS !!!!
I believe the first 1.5 million is exempted from taxing.
And transfers to a spouse are exempt. The tax is on a sliding scale, starting at .6%!
We need an graduated, increasing income tax rate for those earning over $100,000
We need a gas tax dedicated to infrastructure and transportation. 10 cents a gallon will not effect anyone with prices having fallen as much as they have. The tax could even be decreased if the price at the pump averages over $3/gallon for 3 consecutive months.
The senior citizen real estate tax relief needs to be retained. If not retained as is, at least it should be for those with little or no taxable income.
State Employees need a decent wage increase. What people do not realize is that most state employees are not unionized, so that they do not receive “step increases” every year.
“State Employees need a decent wage increase”
Oh my sides. That’s a good one, Mitch. Our GOP Governor finds a decent portion of his budget saving each year in staff & Payroll cuts. $17 million this year alone.
A gas tax and sales tax are both regressive and hurt those who need help the most.
I can’t wait till talks of succession finally start happening, then and only then will the fine Northern part of Delaware will stop carrying the dead weight of the southern part of this state
A gas tax is more of a use tax than anything and is much less regressive than a sales tax. The people who drive alot are those who are shuttling their 2.5 kids to all of their playdates, sporting events, shopping events, schools, libraries and who live in places where the Town Center (mall) for groceries, etc is a hefty drive from their homes. People who don’t have alot of money don’t drive as profligately and — just live everyone who pays a gas tax — pays only for the gas they use.
All true. Still, we all agree that a more progressive income tax, or a tax that didn’t favor passive income would be the best overall solution.
Gas taxes are regressive, but they were always designed to be. The idea is that those who drive should pay for the construction and upkeep of the roads. Given that higher taxes discourage consumption, lack of progressivity is a trade-off I’m willing to make for higher gas taxes.
@Cassandra: Some people — quite a few, actually — drive for a living. Those are the folks who complain about raising the gas tax, because they can’t just take the bus instead.
Again, with few to no public transportation options around, particularly in the more spread out parts of the state, a gas tax hits those who have to drive to work particularly hard and is thus quite regressive.
Subjectivism is the bane of good policy because it’s admitting that one has control over and can makes choices for another. With low income Delawareans having to put in more hours for less purchasing power according to labor statistics, it weighs on the side of immoral to pass any regressive tax no matter how small.
“a tax that didn’t favor passive income would be the best overall solution.”
Why isn’t that ever on the table? Why is the language always about more brackets and higher rates? The only argument against equalizing taxes on passive income to match active income is the specious argument that people will not invest and put their money under their mattress instead.
So why isn’t passive income taxation ever on the table?
Even Greg Mankiw makes the case that gas taxes are not as regressive as claimed. And claiming that a tax is *regressive* is a way to get progressives wrapped up in the “All the Government You Can Eat for Free” strategy of the GOP. A gas tax is a consumption tax. And if you drive for a living, you are sensitive to the price fluctuation of gas anyway, but you are also contributing more to the wear and tear of the roads than someone who does not drive for a living. But the only thing that anyone objects to is the money that helps to fix the roads, not the money that goes into the pockets of oil producers.
Correct, it is a consumption tax. The sales tax is also a consumption tax, however they are both regressive. You can post all the opinions you want, but it doesn’t change definitions and facts. A Regressive Tax is one that disproportionately takes up the income for those who make less.
And that GOP comment shows your true motivation for saying otherwise. Myself and a majority of millennials could care less about Party, but it’s obvious you do.
A Regressive Tax is one that disproportionately takes up the income for those who make less.
Except that you can’t demonstrate that, and Mankiw posted a paper that supports his thesis. You can post all of the opinions you want, but it doesn’t change definitions and facts. Think Progress rounds up more papers on this subject.
Myself and a majority of millennials could care less about Party, but it’s obvious you do.
Which is why you ran for the state legislature as a Republican, yes? To care less about Party? 🙄
Ok, if you want to go into the weeds I’ll follow: your argument is based on a faulty premise that ignores something that can’t be quantified. Those with low income are strapped for cash, therefore any savings coming their way is beneficial to them. Raising the gas tax would take away that savings they are getting from lower gas prices. There are many schools of economics, yet you are only posting those who adhere to Keynesian theory which has created the business cycle and the continued segregation of wealth. If you’re going to use Keynesian economists who are inspired by hate for the GOP then quote Krugman. At least he is well known and easier for simple Google searches.
As for your comment about Party, what does that even mean? We live in a two Party system brought about by first past the post voting. Again, a false premise to your argument, which is that by running on either ticket, I care about Party and based my principles off their platform.
” it weighs on the side of immoral to pass any regressive tax no matter how small.”
As the moral shortcomings of public policies go, this one is so small as to be negligible. To harp on it shows your pathetically misplaced priorities.
And now I’ve just read your analysis of Keynesian economics. Are all millenials as badly informed as you? To claim that Keynes “created” the business cycle reveals you as badly out of your depth.
A gas tax is a non-starter anyway. I don’t know what all the fuss is about. Unless you are a smoker, a state employee, or an oldster in love with oldster’s tax breaks, you have nothing to worry about.
The Governor and State Legislature (both parties) seem pretty committed to not getting their fingerprints on anything that can be described as a tax increase.
Austerity Ubber Alles, BITCHES!
@Geezer: for someone who considers themselves versed in economics, you would know that Keynes teachings came from the lineage of credit and expansion which is the driver behind the business cycle. True he didn’t create it, but his theory was embraced by policy makers and bankers that perpetuated our boom bust cycles. Housing bubble, student loan bubble, and the numerous stock market bubbles, including the tech bubble, are all the result of Keynesian economics being used in policy decisions.
Debating someone as uninformed as you is the only misplaced priority I’ve had today.
Geezer, don’t you know that John Maynard Keynes (born June 1883) caused the Dutch tulip bubble/bust of 1637?
your argument is based on a faulty premise that ignores something that can’t be quantified.
Um, no. The papers in the links I provided certainly attempt to quantify the impact of these gas taxes. If you aren’t even going to read what’s provided, you could save yourself from looking pretty stupid by just saying that you just don’t care about the data.
Greg Mankiw was GWB’s Chairman of the Council on Economic Advisors. He was also an advisor to Mitt Romney’s campaign and is definitely a conservative if you read his blog.
As for your comment about Party, what does that even mean?
It means that you should save your snide allusions to partisanship until you renounce your own.
you would know that Keynes teachings came from the lineage of credit and expansion which is the driver behind the business cycle.
Have mercy — everything this guy knows about economics came from Rush Limbaugh.
The business cycle existed before it had a name. All those “panics” in the early history of the Republic, for example, happened long before Keynes figured out the causes. Your claim is the equivalent of saying that Copernicus is the one who made the Earth revolve around the sun.
And blaming government policy as the driver of the “tech bubble” drives home the point that you don’t know much about the business cycle, either.
True that cassandra. Isn’t it amazing how some people “dress up” credit and expansion for the late 20th and now 21st century, when in fact it was leverage, risk, and unregulated worker/working conditions prior to that creating the noted economic boons earlier.
Now we have regulated workers and working conditions, and only a rare sport who is willing to leverage and risk their own capital and holdings to see a potential new windfall or boom. But everyone sure doesn’t mind losing the bank or government’s money–and decry some nonsense about the business cycle. Investor or imagineer 🙂 remains intact, and the rest of us get to pick up the pieces.
The gurus need to quit discussing vapors and tonics of Benjamin Rush, and get with it on robotics and DNA mapping of this global economy. Criminee, even our military has embraced a whole new world in combat foregoing the timeless studies of military strategy and execution from Hannibal to Eisenhower–but of course with due respect and review.
@Geezer: you’re right about that. I’m just trying to convey that it’s credit and expansion, which is policy now formally known and referred to as the Keynesian school of economics, that has created artificial booms, busts, and wealth gaps. Of course there are natural occurrences as well, but those are not propped back up.
@cassandra: I did read it but blanket assumptions don’t apply to the exceptions and any money having to go toward a tax is money they’re missing, which is why the tax is still regressive. My leanings are Liberal in the classical and true sense. If you look into it you’ll find neither Party currently represents those views, which explains why I worked with the Del Dems pre 2012. I rode in on the Obama wave believing it would bring back two distinct and different Parties. Not sure if you were aware of my background so now you know.
Geezer you edited your comment when I responded. The tech bubble was absolutely the result of expansionary monetary policy, a key tactic of the Keynesian School. The Fed, monetary exchanges and trade deals with Japan and Germany drove that bubble sky high as well as a few other contributing factors.
From Wikipedia, because it’s succinct:
“Some economists, including Barry Eichengreen, Hyman Minsky, and other Post-Keynesian economists, and some members of the Austrian school, regard credit cycles as the fundamental process driving the business cycle. However, mainstream economists believe that the credit cycle can not fully explain the phenomenon of business cycles, with long term changes in national savings rates, and fiscal and monetary policy, and related multipliers also being important factors.”
You’re parroting ideas you don’t understand, and you’re getting them from the branch of economics that has been wrong about everything, consistently, for a long time, because it was concocted not to describe what happens in actual economies but to justify anti-communist, laissez-faire policy.
And credit expansion is not known as Keynesian economics outside of the right-wing bubble.
Lastly, I edited my comment long before your latest comments. I get the same five minutes everyone else does.
@Rob: As a general rule, if you’re interested in running successfully for public office, you should reveal your weaknesses as little as possible. Unless you’re hoping to boost your name recognition at any and all costs, you’re doing yourself no favors here.
Thanks for the advice Geezer, but I post on here for discussion. If comparing ideas and experimenting with what could be agreed upon by Republicans and Democrats is wrong, then that’s a system I wouldn’t want a part in anyway. Surrounding oneself with like minded individuals isn’t going to change anything and that’s why I read this blog almost daily.
This is Palinesque word-salad right here:
I did read it but blanket assumptions don’t apply to the exceptions and any money having to go toward a tax is money they’re missing, which is why the tax is still regressive.
Unless, of course, you didn’t read Mankiw or the paper he linked to.
Not sure if you were aware of my background so now you know.
Which is fine, but you are still running as a mostly doctrinaire Republican in Wilmington. Which still means you have some partisan allegiance here. Certainly you have their facility with fake economics down pat.
Hate on it, try to label me, and disagree all you want, but I changed my views over time by asking why, seeking answers, and not closing my mind for fear of admitting my understanding was wrong. To write it off is to ignore an entire echo boom generation that leans libertarian and is used to having unlimited choices to make for themselves. The Parties will shift to accommodate this coming change. Delawareans are, for the most part, fiscally conservative and socially liberal. My policies and stances reflect that.
And you know that’s Bullshit, right? I give you data and you respond with ideology, with *libertarian * thrown in as a lagniappe. Maybe that answer burnished your millennial self-esteem because it didn’t answer much.