Minnesota Death Tax Poses Threat to Family Inheritances and Savings

Published On: 26th August 2013

From the internet

Minnesota residents now have the distinction of being one of the most heavily taxed in the entire U.S.

Why is this?

The Wall Street Journal said it is because Minnesota wins the grand prize for self-abuse, which just this year enacted a new gift tax of 10 percent with an exemption of 41million. The gift tax is a levy on money that is given away while the giver is still living. This tax is assessed in addition to the 16 percent estate tax. The new law is different in that the 16 percent estate tax is applied to any gift given within three years of the giver’s death.

This is a tax on estates that the federal government already assesses a tax of 40 percent if the estate is over $5 million.

Overall, this is a tax on money that the federal and state governments have already taxed, which is frequently referred to as double taxation.

The argument against a Minnesota death tax is very strong. A study concluded that the total amount of death tax equals no less than 2 percent of the federal revenue and that it discourages people to establish lifetime savings accounts.

The conclusion of the study showed that successful people who have invested and built businesses to create their wealth save money in their later years to leave their heirs. If taxes are raised on those who create wealth, the incentive to save that money will be less and this will reduce the tax revenue that the state of Minnesota anticipates.

Most of the time, a wealthy person will move to a state that doesn’t double tax, such as Texas, Florida, or another state. What this does is pull money and wealth from Minnesota. According to the center for the American Experiment, the state has lost around $3 billion in income because of Minnesotans who have decided to move to Arizona and Florida. This leads to a net revenue loss for the state.

Since double taxation has occurred, many Minnesotans are questioning what they should do and, if the answer is not what they want to hear, they will uproot themselves and their families to ensure that their heirs are able to keep as much as their inheritance as possible rather than the governments getting it.

Resource: http://brainerddispatch.com/opinion/2013-08-23/minnesota-death-tax-poses-threat-family-savings-inheritance