Last week the Maine Legislature’s Taxation Committee voted on party lines in support of LD 420, An Act to Amend the Maine Exclusion Amount in the Estate Tax. This bill, if enacted and signed by Governor Mills, would return the estate tax exclusion amount to $2 million from $5.7 million for estates of decedents dying on or after January 1, 2020, and would remove the annual adjustment for inflation of that exclusion amount. This would mean the Maine estate tax rate, ranging from 8% to 12%, would be incurred by estates valued over $2 million.
This bill has the potential to sink multi-generational farms that our communities can’t afford to lose.
It is critical that legislators hear from real Maine farmers about how this will negatively impact your farm, your family and your community.
Because this bill was voted out of committee along party lines, we urge you to contact the Governor’s office, Democratic leadership as well as your local legislators, to oppose this bill.
Governor Janet Mills
(207) 287-3531
Scott.ogden@maine.gov (Scott Ogden, Communications Director)
Jacqueline.morris@maine.gov (Jacqueline Morris, Executive Assistant to the Governor)
Senator Troy Jackson, Senate President
(207) 287-1500
Senator Nate Libby, Senate Majority Leader
(207) 287-1515
Senator Eloise Vitelli, Assistant Democratic Leader
(207) 287-1515
Rep. Sara Gideon, Speaker of the House
(207) 287-1300
Rep. Matt Moonen, Majority Leader
(207) 287-1430
Rep. Ryan Fecteau, Assistant Majority Leader
(207) 287-1430
Your local Senator and Representative organized by your home town.
More information on the estate tax:
- Maine’s estate tax applies to everything a person owns at the time of his or her death including that person’s home, other real estate, bank account balances, life insurance proceeds, annuities and other investments, IRAs and other pre-tax retirement savings, and tangible personal property such as jewelry, vehicles and household items.
- The combined value of these assets adds up quickly.
- This will impact small business owners including lobstermen, farmers, convenience store owners, truckers, loggers, and forest products sectors.
- Many small business owners do not have substantial savings, so when the estate of a small business owner is not able to pay an estate tax liability, the family must either sell the business or secure a loan to fund the payment.
- Removing assets from the estate is the only way to avoid this estate tax; doing so is not an option for many who have their assets tied up in current operations.
- Furthermore, the fees to hire an estate planning lawyer to remove assets from the estate often can run into tens of thousands of dollars.
- When it is difficult to determine whether the estate of a small business owner exceeds the Maine estate tax exclusion amount, the estate must obtain appraisals of the business and its assets.
- The fees for an appraisal of a small business often exceed $20,000.
- At $2 million, this is essentially a new middle class tax and it is not the progressive tax some consider it to be.
This bill represents poor tax policy management
- If LD 420 is enacted, Maine will have twice increased, and once decreased, the estate tax exemption within the past six years. This could push anyone who is on the fence to go ahead and change their domicile so that they won’t have to follow all the twists and turns of the Maine legislature.
States nationwide are reducing or eliminating their estate tax
- Only eleven other states and the District of Columbia still have an estate tax.
- It’s worth noting that Florida has no estate tax or income tax, and many Maine residents own second homes or have connections to people and places there.
- Just recently, Tennessee repealed its estate tax in 2016; Delaware repealed its estate tax this year; New Jersey phased out its estate tax last year and New York raised its exemption level to $5.25 million last year and will match the federal exemption level this year.