INHERITANCE TAX REPEAL

ISSUES

IN 2001 the legislature is considering HB 170 to repeal the Legacies & Succession Tax. I am a co-sponsor and recently testified in support of the bill. Here's what I wrote last year on it.

July 23, 2000

Unjust NH Inheritance Tax

To The Editor:

I voted for repeal of NH’s unjust inheritance tax and to override the veto of its repeal.

Everyone seems to agree that this tax, known as the legacy & succession tax, is highly discriminatory and unfair. The tax rate is 18% from the very first dollar of value. Lineal heirs and spouses are completely exempt, so the brunt of it falls heavily on the estates of the infertile and childless, on the relatives, siblings, unmarried partners, and caregivers of those without lineal heirs. Family homesteads and heirlooms must often be liquidated to pay it. The only argument I’ve heard against repeal is that we can’t afford it.

Fiscal responsibility cannot stand on a foundation of unjust taxation. The NH Supreme Court reminded us 2 years ago that the “language of our constitution commands that taxes be no less than fair, proportional, and reasonable.” This is nothing new. In 1880, our Supreme Court found that the “unconstitutionality of an unequal division of the public expense among New Hampshire tax-payers has been settled too long, and by too many decisions, to be a subject of debate or doubt.”

In 1906, the Court noted that an inheritance tax “must be an equal tax in the sense that it must affect all persons equally.” Although “reasonable exemptions” have been upheld, the current version of the NH inheritance tax, where ¾ of all estates are completely exempted and ¼ are subjected to a heavy burden, has not been litigated. The legislature is the General Court in this state and the duty to judge whether taxes meet our constitutional standard as just, proportional, and reasonable, lies in the first instance, with us. My conclusion is that this tax, more clearly than any other tax, does not meet our standard and thus I have a constitutional duty to seek it’s repeal at the earliest responsible date.

The Senate first voted to repeal our death tax last October as part of a comprehensive tax reform amendment to HB 109, sponsored by Sen. Jim Squires (R-Hollis) and myself. That plan passed the Senate by a 15-8 vote and would have fully funded the current and projected future deficits as well as the cost of repealing our inheritance tax, state-wide property tax, and interest & dividends tax, among others, by establishing a personal income tax. With opposition from the Governor, the House failed to concur, so I sponsored an amendment to HB 542, the inheritance tax repeal, to change its effective date from upon passage to the start of the next budget cycle, 7/1/01.

By making the repeal effective in the next biennium, there would be no impact on the current budget deficit. The legislature would be on notice to adjust the next budget for an estimated reduction in revenues of $20 to $30 million per year. (Not $35 million or more as claimed by some.) If re-elected I will continue to fight for repeal of this unjust tax and for truly just and comprehensive tax reform.

s/ Senator Clifton Below, (D-Lebanon), District 5

[Note: According to the NH Dept. of Revenue Administration & Legislative Budget Assistant, the total revenue (including interest & penalties) from the NH Legacy & Succession Tax averaged $21.8 million over the past 10 years and $23.0 million over the past 5 years. For FY 2000 (ending 6/30/00) it was $27.8 million, and for each preceding fiscal year: 24.1, 29.8, 22.3, 20.5, 18.4, 19.8, 20.6, 18.4, and $16.4 million back to FY’91, respectively.]