Estate & Inheritance Taxes Counterproductive

Taxing income twice doesn't seem like the right way to produce revenue, it only harms the individual and it strangles business expansion. Why is it so hard to cut spending and so easy to  levying a tax? The politician has to know they are angering everyone in the process.

Common sense seems to have taken a holiday when it comes to fiscal responsibility.

The State of Estate and Inheritance Taxes in 2014
Source: Liz Emanuel, Scott Drenkard and Richard Borean, "State Estate and Inheritance Taxes in 2014," Tax Foundation, May 28, 2014

June 3, 2014

Two U.S. states -- Maryland and New Jersey -- impose both estate and inheritance taxes, explain Liz Emanuel, Scott Drenkard and Richard Borean in a new report from the Tax Foundation.

Estate and inheritance taxes have large compliance costs, suppress entrepreneurship and harm economic growth. The federal government imposes an estate tax, but many states in the U.S. levy their own estate and inheritance taxes.
Estate and inheritance taxes differ in that estate taxes are levied against an estate, regardless of who inherits the assets. Inheritance taxes, on the other hand, are levied on transfers of assets, based on the inheriting party's relationship to the deceased. In the U.S., 15 states and the District of Columbia have an estate tax, six states have an inheritance tax, and only two -- Maryland and New Jersey -- have both.

The Tax Foundation's updated state tax map reveals the latest taxing trends:

• Washington has the highest maximum estate tax rate at 20 percent, while 11 states have a maximum estate tax rate of 16 percent.
• Hawaii and Delaware have the highest estate tax exemption threshold at $5.34 million, while New Jersey has the lowest threshold, at $675,000.
• Nebraska has the highest maximum inheritance tax rate at 18 percent, which applies to transfers to non-relatives. Kentucky and New Jersey are not far behind, imposing a top rate of 16 percent for beneficiaries not of the immediate family.
• Indiana fully repealed its inheritance tax last year, and Tennessee agreed to phase out its estate tax by 2016.