Tennesseans who inherit more than a million dollars got a promise of a tax break today as the state House voted to raise the exemption on the inheritance tax-and do away with it completely by 2016. WPLN’s Joe White reports.
The House raised the exemption for those inheriting more than a million dollars – and promised the so-called ‘death tax’ would be phased out over four years.
Governor Haslam has pushed for the bill. Representative Charles Sargent is guiding it through the House. Sargent says it will help family-owned businesses and particularly family farms which have gained in real estate value over the years.
“All of a sudden when you’re looking at a farm of four or five hundred acres, and you have an estate tax of a million to two million dollars, people have to sell the farm … they don’t have that type of cash.”
Sargent says the new, lesser inheritance tax will result in more “people of wealth” staying in the state after they reach retirement age.
The Senate companion bill is expected to be taken up by the Finance Committee next week.
Sargent, the chair of the House Finance Committee, credited the current House speaker, Beth Harwell, with pioneer work on reducing the inheritance tax.
As a new legislator in 1992 Harwell filed a bill to overturn the inheritance tax.
The inheritance tax is famously uneven, year to year. One year during the Bredesen administration, the forthcoming year’s budget actually tipped over into the black when one Tennessean (who was never identified) died, leaving his heirs liable for large estate taxes.
The legislative fiscal review staff estimated the bill might cost $14 million a year in forgone revenue, but Sargent disagrees.
“Even though it may have a fiscal note saying that we’re going to lose money, there are many studies that will show that we are going to actually make money after the bill has been in force, three or four years.”
The bill passed the House as amended 88-8.