Higher Estate Tax Exemption Moving Forward In Md.
ANNAPOLIS, Md. (AP) — A measure to raise the amount of money exempted from estate taxes in Maryland took a step forward in the state Senate on Wednesday.
The Senate gave initial approval to a bill that already has passed the House of Delegates, and a final vote could come later this week.
The measure would recouple Maryland’s estate tax to the federal one in several years. Now, Maryland estates worth more than $1 million are taxed at a rate of up to 16 percent.
The Maryland bill would raise the exemption to $1.5 million next year and $2 million in 2016. The exemption would rise to $3 million in 2017 and $4 million in 2018 before being coupled with the federal exemption in 2019. The federal exemption, which is indexed to inflation, is projected to be $5.9 million in 2019.
Supporters say the change is needed to prevent wealthy residents from leaving Maryland for other states that either don’t have an estate tax or have lowered it in recent years. Maryland is one of two states, along with New Jersey, that has both an estate tax and an inheritance tax. The estate tax is based on the overall value of an estate, while the inheritance tax is based on who receives it. For example, in Maryland, spouses, children, parents, grandparents or siblings are not subject to the inheritance tax.
Virginia and West Virginia do not impose any taxes on wealth transfers. Estate and inheritance taxes in New Jersey and the District of Columbia are among the highest in the nation.
Sen. Paul Pinsky, D-Prince George’s, questioned why supporters were moving forward with the bill in Maryland this year, when efforts in previous years have failed.
“We want to keep people here who are wealthy, who pay taxes, who invest in our communities,” said Sen. James Robey, D-Howard. “We want to keep the job market growing and with the economy we have right now this is the time we in the committee decided to do it.”
The change would cost the state about $21 million in general fund revenue in fiscal year 2016, $46 million in fiscal year 2017, $77 million in fiscal year 2018 and $105 million in fiscal year 2019.
The measure to change Maryland’s estate tax comes in an election year, as all 188 seats in the Legislature will be decided in November. The Maryland General Assembly has approved a variety of tax increases in recent years, including higher income taxes on people who make more than $100,000.
Maryland hasn’t adjusted its estate tax in 12 years.
(Copyright 2013 by The Associated Press. All Rights Reserved.)