The National Federation of Independent Businesses would like Tennessee to join the 27 states that don’t impose an inheritance tax. The group is happy, however, with Governor Haslam’s plan to make gradual cuts.
Tennessee’s inheritance tax kicks in at a million dollars. Haslam’s plan would gradually raise the exemption level to 5 million dollars. That’s also the starting point for the federal inheritance tax.
The NFIB’s Jim Brown says a lot of small businesses have their money tied up in hard assets like land or equipment. When the owner dies, Brown says it can be difficult for heirs to make an inheritance tax payment.
“They might not have lot of cash on hand to handle that type of situation. It puts them behind the eight ball, they have to delay further investment to stay modernized. They may have to lay off people. Those scenarios do happen.”
Brown sees the business sense of raising the exemption level, but Governor Haslam has talked about the tax’s effect on retirees. He says people who live in Tennessee are moving to states with a higher exemption or no inheritance tax at all.