| Senator William H. Nickerson (R-Greenwich)
announced that the Department of Revenue Services has recently
released a report confirming that the re-imposition of the
estate tax in Connecticut in 2005 is a significant negative
factor in the out-migration of retirees, has a negative impact
on state revenues and is a drag on the economy. The study
directly and authoritatively refutes claims by estate tax
proponents that imposition of the tax has no effect on retiree
estate tax planning. Nickerson
said, “We adopted a movie tax credit incentive to
stimulate movie production. The movie community heard us
and has come galloping in. The DRS report confirms the common
sense idea that by adopting an estate tax disincentive,
retirees heard us and are galloping out.”
Specific findings and conclusions are:
• A DRS survey of tax practitioners indicates that
the estate tax was a factor in the relocation decisions
of a majority of their clients. Specifically, estate tax
practitioners reported that 52.6% of their clients who changed
their residence to another state did so primarily to avoid
the Connecticut estate tax, and another 24.3% did so partially
for that reason.
• Alarmingly, Connecticut is a
significant and growing net exporter of residents, losing
12,823 residents in the 2005/6 period vs. a loss of 893
in the 2002/3 period.
• The state which was by far the
largest recipient of net out-migration from Connecticut
was Florida which does not have either an estate tax or
an income tax. Connecticut lost a net of 16,170 households
to Florida in the last four years, while the next largest
recipient state was far back representing a loss of only
3,538.
• The study found that the majority
of states did indeed make a conscious decision to eliminate
their estate tax and forego such revenue. The reason is
that retiree out-migration removes not only potential estate
tax revenues from state coffers, but also removes income,
sales, and other tax revenues which would have been received
had the retiree remained in state.
• Connecticut lagged well behind
states which do not have an estate tax in growth in employment,
personal income, population, and gross state product.
This report was mandated by Public Act
07-1 adopted in June 2007. This full report may be viewed
at:
http://www.ct.gov/drs/lib/drs/research/estatetaxstudy/estatetaxstudyfinalreport.pdf#48817
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