Devlin pushes to repeal Estate and Gift Tax
In an attempt to stem the tide of residents leaving the state, State Representative Laura Devlin (R-134) pushed for a proposal in the legislature’s Finance, Revenue and Bonding Committee today to repeal Connecticut’s Estate and Gift Tax.
The proposal, Senate Bill 446: An Act Repealing the Estate and Gift Taxes, would eliminate the current Connecticut tax on all estates. A resident estate includes one’s house, car, furniture, bank account, brokerage account, IRA, 401(k), business interests.
Right now, estate and inheritance taxes are imposed on the taxable value of property a person bequeaths to his or her heirs. An estate tax applies to the total value (after deductions and exemptions) of a person's real and personal property (“estate”) at his or her death, while an inheritance tax is a tax on each heir's right to receive the property transferred.
“Repealing the Estate and Gift Tax would be a crucial first step in ensuring the retention of our senior citizens,” Rep. Devlin said. “These taxes encourage residents to move out of the state or simply not choose Connecticut as a place to live. This results in a loss of economic opportunity for the state, as well as lost revenue.”
According to the Yankee Institute, “from 2011-2013, the state lost 30,417 people and $3.83 billion in taxable income to states without estate taxes.
Connecticut is one of the few states that have an estate and gift tax. Most recently, Minnesota repealed its gift tax in 2014 a year after it was adopted in 2013. Louisiana repealed their gift tax in 2007, North Carolina in 2008, and Tennessee in 2012. Following in the footsteps of these states will help encourage retirees to stay in Connecticut.
Unlike the federal estate tax, Connecticut’s estate tax is not fixed to inflation so the tax remains at $2 million, which makes it more likely to impact additional taxpayers every year. The federal threshold for 2015 was $5.43 million, up from $5.34 million in 2014.
Devlin also mentioned that in addition to the estate tax, probate court fees are also levied as part of the process to finalize the transfer of assets after a person dies. As part of Connecticut’s 2015 budget implementer Devlin opposed, the $12,500 cap on probate fees was eliminated, and court fees were increased to 0.5 percent of estates valued over $2 million.
The removal of the cap resulted in significant increase in the cost of probate court fees — with some fees reportedly topping $1 million.