(Augusta, ME) The Maine Center for Economic Policy (MECEP) today released Estate Tax Reform: Investing in Maine’s Future, by Clifford Ginn. Estate tax reform will also be discussed on the State of the State television program on Adelphia Channel 9 on Saturday and Sunday August 26 and 27 at 11:30 am and Tuesday August 30 at 7:30 pm. Guests are Clifford Ginn, MECEP; Warren Kessler, retired CEO of MaineGeneral Health; and James Wellehan, President of Lamey-Wellehan.
The report finds several key reasons why estate tax repeal would harm the Maine economy and communities. First is the tremendous increase in the federal deficit it would cause — $970 billion between 2012 and 2021, at a time when the projected deficit for the period is already $3.7 trillion, and Congress is preparing to make budget cuts in programs as diverse as Medicaid, community development, and environmental protection. The impact on Maine would be particularly great because Maine relies more heavily on such federal programs than other states.
Second, estimates are that estate tax repeal would lead to a loss of $70-$140 million in annual giving to Maine charities due to the lost incentives the estate tax provides for private charitable giving. This would trigger program cuts in local nonprofit programs as well.
Third, claims that family businesses and farms are being lost due to the burden of the estate tax have repeatedly been shown to be false. In Maine only .34% of estates pay any estate tax because of the relatively high level of the exemption. Ginn notes that raising the exemption to $2 million would reduce that number in Maine to .17% of estates. In addition, most families and businesses can take advantage of numerous tax code provisions and planning devices to minimize estate tax liability.
President Bush supports full repeal and the U.S. House of Representatives has also voted in favor of full repeal. The U.S. Senate is scheduled to vote whether to take up the proposed repeal and may consider a “compromise” amendment when they reconvene September 6.
“While Maine Senators voted for full repeal in 2002,” said Christopher St. John, MECEP executive director, “circumstances have changed radically since then. We are hopeful that the threat of adding to the already serious Federal deficit when other serious needs are not being met can convince Senators Snowe and Collins that now is not the time to support either full repeal or a “compromise” that gives up almost as much revenue as full repeal.
“For about one hundred years the estate tax has been based on the sound principle that the Americans who have benefited most from our economy and our society should invest some of their wealth back into the system that helped create it,” said St. John. “A modest increase in the estate tax exemption while retaining the current tax rate will leave the vast majority of estates untaxed and small businesses and farms protected, while not giving unneeded benefits to a very small fraction of the wealthiest families in America.”
