Here is some miscellaneous reaction from Massachusetts media outlets following the Senate’s announcement of it’s estate tax relief proposal.
Like the House, the Senate plan also would reshape the Massachusetts estate tax, considered among the strictest in the country, by raising the tax threshold from $1 million to $2 million. The Senate proposal also offers a credit to eliminate the so-called “cliff effect” of taxing an entire state once it passes the threshold.
In a proposal released on Thursday, Senate budget writers borrowed elements from the House and Healey plans, including tax breaks for renters and families, a big boost for a market-rate housing program, and a reduction in the estate tax. But the Senate plan doesn’t touch the 12 percent tax on short-term capital gains, a provision in the tax code that was scratched by both Healey and the House.
[T]he Senate’s version of the estate tax matches the House’s plan in excluding estates under $2 million from the tax, doubling the current threshold. To eliminate the “cliff effect,” where the tax kicks in just one dollar over the threshold, the proposal would allow a uniform credit of $99,600. This estate tax change would cost the state about $185 million. Healey’s tax plan would raise the threshold to $3 million.
Senate Democrats proposed excluding estates valued up to $2 million from the estate tax, $1 million lower than Healey proposed but on-par with what the House approved.
Sen. Ryan Fattman, a Sutton Republican, said the Senate tax relief proposal is “underwhelming.” He criticized Democrats for not proposing a larger threshold for when the estate tax kicks in.
“I think what I’m struggling with on this is you earn income, you’re taxed on it. You spend it, you’re taxed on it. You invest it, you’re taxed on it. And in Massachusetts, when you die, your family is taxed on it,” Fattman said. “And if you truly look at trying to become a competitive place for people to live, raise a family, build a business, spend the rest of their life, the estate tax at $2 million as a proposal is just a ridiculous notion.
The Senate, like the House, would also raise the state’s estate tax threshold from $1 million to $2 million, a doubling of the threshold that mirrors what’s in the House’s proposal. Also similar to the House’s version, the Senate is looking to allow a uniform credit of $99,600. The Senate’s version of the estate tax will cost the state $185 million, according to reporting from the State House News Service.
Healey, who released her own $742 million tax relief package in February, would eliminate the tax for estates valued up to $3 million.
Massachusetts is one of just 12 states with an estate tax.
The proposal also exempts estates valued under $2 million from the estate tax and seeks to eliminate the “tax cliff,” when any estate above the threshold triggers taxes on the entire value rather than just the overage.
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The Senate’s version of the estate tax reform, also controversial with progressives, carries a total cost of $185 million to the state. It aligns with the House’s proposal to double the threshold at which the estate tax kicks in, from $1 million to $2 million, and seeks to eliminate the so-called cliff effect, by allowing a uniform credit of $99,600.
The House took a slightly different approach to try to eliminate the cliff effect, instead only taxing the value of an estate that exceeds $2 million, and not the entire estate as law currently requires. This approach carries a larger price tag for state coffers, likely costing an estimated $231 million.
This post is a part of Old Colony Law’s Estate Tax Updates.