AUGUSTA, Maine — Gov. Paul LePage has again proposed legislation that would eliminate Maine’s estate tax, which is the tax assessed on estates after the owner dies and property becomes available for inheritance.
This is the latest of numerous failed attempts by LePage to eliminate the estate tax, which he calls the “death tax.” He included a similar provision as part of his biennial budget proposal in 2015, but the Legislature amended the budget bill to make the estate tax apply only to estates valued at more than $5.5 million, and only on the value of those estates above $5.5 million.
When LePage took office, the threshold was $1 million in estate value — and assessed only on value above $1 million — but that was doubled in 2013 to $2 million.
If passed, the law eliminating Maine’s estate tax would take effect on Jan. 1, 2017.
“You are taxed throughout your life on what you earn, what you buy and what you sell,” said LePage in a written statement. “With ObamaCare, you are taxed just for being alive. It seems only reasonable that Maine should join the majority of states in this country that allow you to leave a nest egg for your loved ones without taxing it when you die.”
Maine is one of 18 states that have some form of estate or inheritance tax, according to the LePage administration.
The federal government pulled back on estate taxes in 2001 with the enactment of the Economic Growth and Tax Relief Reconciliation Act, which ended a nationwide assessment of the estate tax. Since then, 32 states have chosen to repeal their estate or inheritance taxes.
LePage on Tuesday introduced his vehicle for proposing the tax cut in LD 1622, which is sponsored by Rep. Stedman Seavey, R-Kennebunkport, and Sen. Earle McCormick, R-West Gardiner.
Democrats have long called the estate tax a fair assessment on wealthy households and have argued that eliminating it would put too much pressure on the rest of the budget. With control of the House of Representatives, the Democrats have the numbers to block LePage’s bill, though they would likely face questions about it in this year’s legislative elections.
The Maine Center of Economic Policy said in a news release Tuesday that of the 13,000 Mainers who die each year, fewer than 60 estates are subject to Maine’s estate tax. Nearly half of those estates are for out-of-state residents. The Maine Center of Economic Policy estimates that eliminating the estate tax would cost state government about $18 million annually, which is based on previous analysis by Maine Revenue Services, according to Garrett Martin, executive director of The Maine Center of Economic Policy.
The amount Maine brings in from the estate tax fluctuates from year to year based on who dies and how much their estate is worth. According to figures from the LePage administration, revenue from the estate tax reached a peak of more than $70 million in 2012 but otherwise has been less than $50 million a year.
LePage said part of his reason for eliminating the estate tax is to help businesses be passed down through generations.
“It hopes that families fail to do proper end-of-life planning and unfairly punishes our small and medium-sized multi-generation businesses when ownership transfers as a result of an individual’s death,” said LePage. “It is not a tax we should assess and not one we should be proud of.”
The Senate on Tuesday referred the bill to the Taxation Committee, which will debate it and make a recommendation in the coming weeks.