The legislature’s Finance Committee finished its work this week without ever considering Governor Rell’s bill to repeal the onerous estate tax.  This was a great mistake.

Some have claimed that the imposition of an estate tax has no effect on outmigration of mobile retirees to other states.  Not so.  A recent thoroughly researched academic paper by Professor Bakija of Williams College and Professor Slemrod of the University of Michigan studied thousands of returns throughout the United States and determined that an increase in a state’s estate tax is directly associated with retirees’ outmigration to more tax friendly states.  Unhappily, I have a file of letters from constituents, or I should say more accurately former constituents, who have written to me indicating that they have done exactly that.

Another misconception is the claim that the tax is a reliable source of revenue for the state, when in fact exactly the opposite is true.  The legislature’s non-partisan Program Review Committee studied the issue in depth and concluded that “estate tax revenues are highly volatile.”

Some have even spread the fear that repealing the tax will take away revenue which will hurt the quality of life for seniors.  Again, not so.  The Committee’s study states that estate tax revenues are “a very small part” of tax revenues, less than 1% at most.  I submit that they are actually less than that when one takes into account not only the lost estate tax but also the lost income tax when retirees are induced to move out. 

It is vital that the legislature respond to real facts, not imaginary fears, and eliminate this tax.