Looking forward to that end to the federal estate tax the Bush administration pushed through Congress? Good idea – except in some states. Several states are planning to raise their estate taxes, even in the face of the growing revenues they’ve hauled in over the past few years.
The federal death tax – a better name for the estate tax because it places a levy on dying – is being phased out until it’s fully buried in 2010, only to be resurrected a year later (a quirk of the code that we hope doesn’t trigger a lot of bedside plugs being pulled on the elderly just before midnight on Dec. 31, 2010).
But the federal death tax is only half the story; states also have a hand in making death a taxable event. As the federal death tax falls, state revenues also fall since they are based on the federal tax.
So, the Wall Street Journal has reported, about a third of the states are trying to decouple their death taxes from the federal tax so they can keep taxing the deceased. Will these efforts drive some seniors who want to escape the sticky hands of their state legislatures into moving to other, less rapacious states?
For years, seniors have been flocking to Florida for retirement. And if more states decide to increase their estate-tax grab, Florida is likely to see its elderly communities grow even faster. That’s because in addition to having no income tax, Florida has no estate tax.
In conclusion, let us recommend three actions, with the third dependent on the first two.
First, Congress should kill the death tax once for all. No resurrections.
Second, the states should also kill the estate tax for good, and learn to live off their burgeoning coffers without taxing death.
Third, if the first two don’t happen, buy property in Florida. The value is sure to go up.