Tweet of the Week: Hat Tip to Rep. Stephen Bloom
This week we tip our hat to Representative Stephen Bloom who believes the Pennsylvania death tax should be eliminated. In an effort to rid the Commonwealth of this burdensome tax Representative Bloom began the process of chipping away at it with the passage of a bill which would end the death tax for Pennsylvania farms. This session he is moving forward with a bill to eliminate the “Mom and Pop Shop” death tax. AFP-PA is proud to support Representative Bloom’s bill. Please see our letter of support. And make sure you follow @RepBloom on Twitter!
Letter of Support: Family Business Death Tax Elimination in Pennsylvania, HB 48
January, 2013 – Budget and Taxes
Dear Representative Bloom:
On behalf of more than 117,000 activists with Americans for Prosperity-Pennsylvania, I am writing in strong support of your bill, HB 48, to eliminate the inheritance tax on family businesses in Pennsylvania.
While most states have eliminated the “death tax” in recent decades, Pennsylvania is one of seven states that still levies it. One of the most egregious aspects of the inheritance tax is the burden it places on Pennsylvania’s family-owned businesses. Those family members inheriting a business are often faced with the difficult decision of either selling assets, taking out a loan, selling the business or closing it outright just to pay the inheritance tax. For example on a business valued at $500,000, a child of the deceased must pay $22,500 in inheritance tax (4.5 percent). If the business goes to a brother or sister, he or she must pay $60,000 (12 percent). HB 48 makes all transfers between family members devoted to the same business not subject to the tax.
The inheritance tax currently makes up 3 percent of Pennsylvania’s total revenues. The total revenues projected to be lost if HB 48 were enacted would be a relatively modest $9.9 million according to the Pennsylvania Department of Revenue. However, to those families wanting to keep their businesses open, the thousands or tens of thousands they do not have to pay in inheritance tax could make the difference between keeping the doors open or hiring new employees. Further because businesses that may have otherwise closed their doors and put people out of work will stay open, what is lost in the inheritance tax revenue stream, will very likely be made up in part or in whole through income, sales and other taxes.
Beyond the burden the tax places on businesses, it is philosophically wrong. All the money levied from the inheritance tax often represents double and even triple taxation. The money was originally taxed as income, then, if invested, taxed again as capital gains or dividend income, and taxed yet again after a person dies with the inheritance tax.
It is time to end the death tax in Pennsylvania, and HB48 is positive step in that direction. Americans for Prosperity is proud to support this bill. I urge your colleagues to support its passage, and I look forward to working with you in the future.
Americans for Prosperity-Pennsylvania