CLT News Release
Tuesday, September 10, 2019
CLT Supports Estate Tax
Opposes “Bifurcated” Property Tax
To: Members of the Joint Committee on Revenue
September 10, 2019
RE: The Massachusetts Estate Tax (H-2446); and a “Bifurcated” property
The cleanest, most straightforward bills to address the
Massachusetts Estate Tax are S.1657 and S.1731, both titled "An Act
abolishing the death tax." As one of only eleven states in the nation
that still imposes an estate tax, it is incumbent upon Massachusetts to
catch up with the other 39 and repeal its estate tax as well.
Failing that, the very minimum this committee and the Legislature
as a whole can and should do is to update and modernize what is
currently imposed on the heirs of deceased state citizens. The state
estate tax has an unique “threshold trigger” not found elsewhere, and it
has not been adjusted for inflation, or for the Bay State's booming home
property value appreciation, in almost two decades while the CPI has
increased by 46.5%.
Compare that to state spending over the same period (FY2001 State
Budget: $21.4 billion; FY2020 State Budget: $43.3 billion) — a 202%
Bill Harris, then-president of the Financial Planning Association
of Massachusetts, noted in his December 2017 Wicked Local Plymouth
"Massachusetts implemented the current estate tax rules back in
2001. Unlike other states, it’s never been indexed for inflation. In
the past three years, nine states have eliminated or lowered their
estate taxes. Many more states are raising their lifetime exemptions
(the amount that is excluded from estate tax calculation). New Jersey
is scheduled to eliminate its estate tax altogether, joining about a
half-dozen others that have ended their estate taxes over the past
New Jersey repealed its estate tax last year, leaving only eleven
states that tax the estates of its deceased citizens. Currently
Massachusetts is tied with Oregon as the most onerous, with the lowest
exemption of $1,000,000.
Mr. Harris further noted:
"If you think the estate tax is only for the wealthy, think
again. The Massachusetts estate tax is regularly entrapping
unsuspecting middle-class families. If you own a modest house on the
South Shore and you’ve funded your IRA for an adequate retirement, your
estate may get hit with the death tax. In estate planning circles,
Massachusetts is the least desirable state in which to reside if you
want to pass assets to your heirs. . . .
"The Massachusetts exemption threshold is only $1 million, much
less than the current federal estate taxes. But unlike the federal
estate tax, which only taxes the excess over the threshold, in
Massachusetts the threshold is a trigger, and the majority of estate
becomes taxable . . . snaring lots of taxpayers at death.
"The tax on a $1 million estate is approximately $36,000, however
the tax on an estate that is $999,999 is zero. If you are a
Massachusetts resident and all of your assets combined are just a bit
above $1 million, get below that threshold or change your residency
before you die. Otherwise, death taxes will be due."
Citizens for Limited Taxation supports
H-2446, "An Act relative to
the Massachusetts estate tax code" sponsored by Rep. Shawn Dooley and
others. It is a well-considered proposal that will help ameliorate the
currently excessive state estate tax situation.
We hope this committee will favor H-2446 as well.
Citizens for Limited Taxation opposes one dangerous bill before
the committee today, sponsored by Sen. Julian Cyr and Rep. Dylan
S.1634 ("An Act relative to a bifurcated property tax")
would radically transform the municipal property tax into a progressive
tax with different tax rates dependent on some criteria not defined in
their bill. CLT strongly opposes the inevitable rancor and division
this would engender while pitting neighbor against neighbor over
different property tax rates. Citizens for Limited Taxation will always
oppose anything that erodes or distorts the intent of our Proposition
2½, as S.1634 would surely do.
It is also noteworthy that should S.1634 ever pass it will be
challenged in court as presumably violating the Massachusetts
Constitution, Article XLIV: ". . . Such tax may be at different
rates upon income derived from different classes of property, but shall
be levied at a uniform rate throughout the commonwealth upon incomes
derived from the same class of property. . . ."
We hope S.1634 will be rejected by this committee.
Citizens for Limited Taxation ▪ PO
Box 1147 ▪ Marblehead, MA 01945
▪ (781) 639-9709