| 2/6/2013 |
Rep. Craven proposes increase in "death tax" threshold
STATE HOUSE – Rhode Island’s imposition of an estate tax, also known as the inheritance tax and “death tax,” is rationalized as being paid only by the wealthy who can most easily afford it.
In reality, said Rep. Robert E. Craven (D-Dist. 32, North Kingstown), because of sophisticated estate planning techniques, the tax has little if any effect on the very wealthy. “The true burden of this tax falls on small business owners, small farms, owners of forest and shoreline property, people who don’t have the resources to employ some of those estate planning techniques. It falls heavily on the children of deceased parents whose estates were not really all that large,” he said.
For those whose inherited wealth is in the form of farmland, forestland or other open tracts of land in Rhode Island, the burden of the estate tax adds to the pressure on the new generation owners to sell off portions of the land to pay the tax, thereby obliterating more and more of the state’s dwindling open space.
Representative Craven has introduced legislation that he hopes will offer a level of fairness to those presented with an estate tax bill. His legislation, (2013-H5249), would raise the threshold above which the tax can be applied from the current $675,000 to $2 million.
“The $675,000 has not been changed since 2002, and we all know that the value of most things, especially land and businesses, has increased significantly since then,” said Representative Craven. “A $2 million threshold is not only what I would consider morally just, but it is also a more appropriate figure for today’s economic reality.”
Another economic reality, said Representative Craven, is that many Rhode Islanders, especially those with some financial wherewithal, leave Rhode Island to establish residences in other (more tax-friendly, often southern) states. “Perhaps our unrealistic estate tax limit is part of the explanation for 24,000 people leaving Rhode Island during the past 10 years,” he said.
The Rhode Island “death tax” has always been and continues to be one of the least significant sources of revenue in the state budget, said Representative Craven, “while at the same time hurting small businesses or moderate-income families who may have some land assets to pass on to their children. This tax is not just about the state collecting money; it is about putting unnecessary financial burdens on inherited small businesses.”
A $2 million threshold, Representative Craven believes, “is a fair compromise because the state can still collect revenue on the larger, much more valuable estates but by exempting the smaller estates, we can play a valuable role in saving small businesses and preserving farms and forests and land along the shore. Pulling in more tax revenue is not, in my opinion, worth the destruction of our natural resources.”
The Craven bill has been referred to the House Committee on Finance. It is co-sponsored by Rep. Donald J. Lally Jr. (D-Dist. 33, Narragansett, South Kingstown), Rep. Joseph M. McNamara (D-Dist. 19, Warwick, Cranston), Rep. Donna M. Walsh (D-Dist. 36, Charlestown, New Shoreham, South Kingstown, Westerly) and Rep. Linda Finn (D-Dist. 72, Middletown, Portsmouth).
For more information, contact:
Randall T. Szyba, Publicist
State House Room 20
Providence, RI 02903
(401) 222-2457 |
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