An unsigned editorial in the Wall Street Journal points out that while the American Taxpayer Relief Act established a 40% rate for estate taxes with a permanent $5 million per person exemption, you can pay far more depending on where you die. And that’s a good reason for seniors to flee to states with no estate tax.
The grand prize for self-abuse goes to Minnesota, which this year enacted a new 10% gift tax with a $1 million exemption. A gift tax is a levy on money given away while still alive. This tax is in addition to Minnesota’s 16% estate tax. The new law is all the more punitive because it applies the 16% estate tax (6% on top of the earlier 10% gift tax) to any gift within three years of death.
This is essentially a clawback tax, or more taxation without respiration. Democratic Governor Mark Dayton, who signed the law, is the heir to a department store fortune and knows a lot about inheriting wealth but not much about creating it.
Are we driving the wealthy to move to Florida? Tennessee? Read the entire editorial.
Here’s the report from the Center of the American Experiment that is quoted in the Journal.