Death Tax in Pennsylvania
Issue Overview: The inheritance tax, or death tax, has become part of the class warfare that besieges any attempt to bring tax relief to the American people. In 1826, Pennsylvania became the first state to adopt a death tax. Today, the Commonwealth remains one of 13 states to impose such a tax. NFIB led an effort in 2000 that resulted in lowering the rates on lineal descendants from 6 percent to 4.5 percent, and lowering the rate on sibling transfers from 15 percent to 12 percent. NFIB vowed that this only was the first step towards eliminating the tax altogether.
The death tax is double-taxation, pure and simple. Estates that parents pass on to their children didn't just appear by magic. Someone worked a lifetime to earn that money -- and paid taxes on the money they earned.
NFIB believes the state already has taken its fair share of taxes while the individual taxpayers were alive and working. The death tax simply represents a cash cow for state government -- more than $800 million annually -- on income that was taxed while the person was alive.
NFIB maintains the death tax is unfair to all Pennsylvanians, but particularly to small businesses. Death taxes can deal a deathblow to a family business at its weakest moment. Many businesses are devastated by this tax after the loss of an owner. And the threat of death taxes actually forces many small-business owners to pay for expensive estate planning if they want to keep their business in the family. Many pay tens of thousands of dollars simply to protect an estate from the death tax.
NFIB Position: The death tax is especially harmful to small business, and its repeal is one of NFIB's top legislative priorities. The death tax amounts to kicking a family business when they're down.
Issue Status: 2007 Action: NFIB will continue its work with legislators in the 2006-07 session to eliminate Pennsylvania's Death Tax.
What to Do: NFIB needs your voice to help kill the death tax. Contact Gov. Rendell and your state Senate and House members.
What to Say: Urge Gov. Rendell and your state lawmakers to repeal the state death tax in the 2007-08 state budget. Tell them the death tax is double-taxation, pure and simple. Tell them the death tax simply represents a cash cow for state government on income that already has been taxed while the person was alive. And tell them that while you believe the death tax is unfair to all Pennsylvanians, it's especially harmful to small, family businesses. Death taxes can deal a deathblow to a small, family business at its weakest moment.
