Top Democratic Leaders Propose to Cut Estate Taxes

Top Democratic Leaders Propose to Cut Estate TaxesTop Democratic leaders of the Maryland General Assembly agreed to a significant reduction in the estate tax, to be implemented in a four year time span.

Senate President Thomas V. Mike Miller Jr. (D-Calvert) and House Speaker Michael E. Busch (D-Anne Arundel) proposed to raise Maryland’s current $1 million dollar exemption to that of the federal government’s level, which in 2013 was set at $5.24 million. In addition to the District of Columbia, Maryland is only one of sixteen states to have an estate tax, also known as the “death tax.” The proposal was outlined on January 24th.

Humorously, Miller cited as one reason for the move the attempt to erase Maryland’s association with the state you “want to leave before you die.”

Though the bills have not been formally introduced, this type of unusual cooperation nearly ensures the bill’s approval when it comes up for vote, which it is undoubtedly expected to do so. Longtime proponents of cutting the tax, state Republicans welcome the move.

What are the economic consequences? Currently, Maryland taxes at a rate of 16% on estates valued at over a million. Four years from now, when the estate tax reduction is supposed to be fully implemented, the state is slated to lose $87 million in revenue from these taxes. Though, for obvious reasons, lawmakers are gambling that the overall financial benefits will outweigh the revenue loss.

In a further effort to reduce the state’s not-so-stellar business climate—Maryland ranks 43rd in business climate—the two lawmakers also introduced a new commission to pinpoint problems and outline potential solutions for making Maryland more attractive to businesses. The commission will be run by Norman Augustine, formerly the retired chairman of Lockheed Martin. In an additional measure, the state lawmakers proposed a set of targeted tax credits in the hopes of vitalizing businesses around universities

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