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... [S]tates can go a long way toward meaningful reform by repealing their estate and inheritance taxes. I have said before on many occasions that the state estate taxes are nothing more than jealousy fueled money grabs...
Right now 21 states and the District of Columbia impose some kind of estate tax. And while the exemption at the federal level is a hefty $5.25 million, all of the states have exemptions that hit much more modest estates... New Jersey and Maryland have both estate and inheritance taxes - which is just asinine.
Here is what is wrong with state estate and inheritance taxes... [I]t is the well to do, but not crazy rich who bear the burden. Upper middle class folks who have a house and 401k account can reach the threshold for paying tax very quickly. The states punish them for working hard and saving for the future. But it also punishes them for not having enough money to plan around the tax...
Increasingly, I hear stories of relatively wealthy people contemplating moving to states that do not tax their assets upon death... I am betting more will do so in the future. And that cannot be a good thing.
View David Brunori's opinion in its entirety on the taxanalysts® Blog.
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