After less than a decade of having one, Delaware has repealed its estate tax.
State legislatures around the country share a very common fear. They are afraid that if the wealthy residents of their states do not like their state’s tax laws, they will move to other states whose laws they prefer.
That can cost the state a lot of tax revenue.
Many legislators believe that it is often better to give into the tax demands of wealthy people and lose only a little revenue, instead of risking wealthy people moving and losing a lot of revenue.
There is one particular tax for which this fear has often been made public in debates over the tax. That is the estate tax.
It is because of this very fear that Delaware recently repealed its estate tax as Forbes reports in "Latest State To Repeal Estate Tax: Delaware."
Delaware's estate tax had not been in existence for very long. It was only passed in 2009 when the state faced a temporary revenue shortfall and it was believe that the estate tax could help make up for it.
However, the tax itself brought in a relatively small amount of money. Attorneys representing wealthy people who had left the state also informed officials that a primary reason for doing so was the estate tax.
As a result, it was believed that the tax was costing the state more in lost income tax revenue than it gained in estate tax revenue.
Only a minority of states still have an estate tax.
As more and more states repeal it, it will be that much tougher for the others to hold out.
For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Forbes (July 5, 2017) "Latest State To Repeal Estate Tax: Delaware."