‘My family should not have to pay again if I die.’
Minnesota made a recent Forbes list, but the honor is dubious: Where Not to Die in 2015. Minnesota earned its place on the list as one of 19 states (plus the District of Columbia) that impose an estate tax on the transfer of property after people die.
To make matters worse, says Mike Hickey, NFIB’s Minnesota state director, Minnesota is currently way out of conformity with the federal exemption level, or the amount an individual can leave before the estate tax kicks in. The federal exemption is $5.43 million, while Minnesota is phasing into a $2 million exemption by 2018.
For small business owners like Jerry Kortesmaki, who opted to start his own business to leave something for his family, the estate tax system, especially Minnesota’s low exemption level, threatens to undercut the secure future he’s worked for. In many cases, faced with a crippling estate tax burden upon a business owner’s death, families cannot keep the business going.
Kortesmaki and his wife, Cathy, started London Road Rental Center in Duluth, Minnesota, 13 years ago. They used their savings and borrowed against their house to get going and, through hard work and sacrifice, grew their operation to three stores and nine full-time employees. Kortesmaki continues to work hard to pay off his property, keep his debt low and grow the business—but the more it prospers, the more troubled he is about what kind of estate tax bill his family could be left with.
“That is where the problem with the estate tax lies,” Kortesmaki says. “I have paid income and property taxes every year on my business and home. I have met every step and jump that the government and IRS have put in my way. I should not have to worry about my family continuing this business if something happens to me…. I paid taxes on what I have done, and my family should not have to pay it again if I die.”
Hickey is hopeful that the new pro-business majority in the Minnesota House will tackle this key small business concern this session, but in the meantime, NFIB/Minnesota will be pushing to reform the state estate tax exemption to match the federal level.
