MECEP Urges Legislature to Maintain Maine’s Estate Tax

Proposed bills cut progressive tax on “a very small number of very wealthy estates but which benefits all Maine people”
Augusta, Maine (Monday, March 21, 2011)—The Maine Center for Economic Policy (MECEP) today urged the Maine Legislature’s Joint Standing Committee on Taxation to reject L.D. 423 and L.D. 1147, bills to raise the exemption from or eliminate entirely Maine’s estate tax.  Annually, the estate tax only affects the wealthiest 600 or so estates, those worth more than $1 million

“With this Legislature currently facing an $840 million revenue shortfall, now is not the time to pass these bills or any other that unnecessarily weakens the estate tax,” Dan Coyne, MECEP’s Fiscal Policy Analyst, stated in prepared testimony.  “Maine’s best hopes for quick economic recovery and prosperity require maintaining critical investments in our people and quality of place, not in repealing progressive tax policies that help fund those core investments.”

Coyne also addressed arguments that the estate tax hurts small business and encourages the wealthy to leave Maine to avoid paying it.

“The estate tax has a negligible effect on small businesses and family farms,” Coyne testified.  “According to the Tax Policy Center, only about 110 small businesses and family farms nationally would have been subject to the federal estate tax in 2011 at the 2009 $3.5 million federal exemption level.  It is largely a myth that the current estate tax harms Maine’s small businesses and family farms.”  

“The out-migration issues raised by proponents of estate tax reform are also overstated,” Coyne added.  “The non-partisan Center on Budget and Policy Priorities (CBPP), a well-respected federal and state fiscal policy organization, noted that ‘studies find that estate taxes have a small effect on the residence decisions of the very wealthy elderly – few people are likely to be affected and the size of the effect is small.'”
Coyne’s prepared testimony is available on MECEP’s website, click here.