Governor Announces Plan to Eliminate Maine’s Death Tax

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For Immediate Release: Tuesday, March 1, 2016
Contact: David Heidrich, Director of Communications, 
Department of Administrative and Financial Services, 624-7800

Governor Announces Plan to Eliminate Maine’s Death Tax
Maine to join 32 other states in eliminating estate tax.

AUGUSTA – Today, Governor Paul R. LePage introduced legislation eliminating Maine’s death tax. The measure, sponsored by Rep. Stedman Seavey (R-Kennebunkport) and cosponsored by Sen. Earle McCormick (R-Kennebec), will eliminate the tax assessed on estates when the ownership of property transfers as a result of the owner’s passing. The measure will be effective starting on January 1, 2017. 

State of Maine's Death Tax

Governor LePage first called for the elimination of the estate tax as part of his January 2014 biennial budget submission, proposing to conform to the federal estate tax exemption for 2016 and eliminating the estate tax in 2017. The Legislature only adopted his proposal to conform with the federal estate tax exemption amount.

“It has been said that the only thing certain in life are death and taxes,” said Governor LePage. “You are taxed throughout your life on what you earn, what you buy, and what you sell. With ObamaCare, you are taxed just for being alive. It’s seems only reasonable that Maine should join the majority of states in this country that allow you to leave a nest egg for your loved ones without taxing it when you die.”

Following the repeal of Tennessee’s inheritance tax at the beginning of 2016, Maine is one of only 18 states that have some form of estate or inheritance tax. Most of those states are located in the Northeast and Midwest.

United States of Death Taxes

“Maine’s death tax has outlived its usefulness,” added Governor LePage. “It hopes that families fail to do proper end-of-life planning and unfairly punishes our small and medium-size multi-generation businesses when ownership transfers as a result of an individual’s death. It is not a tax we should assess and not one we should be proud of.”

Collections from the estate tax vary wildly each year, making it an unpredictable revenue source, as the state predicts the number of individuals that might die in a given calendar year.

In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act. This legislation significantly altered the structure of estate taxes in the United States. Prior to its enactment, every state used the federal death credit as their estate tax. Regardless of a person’s state of residence at death, the estate tax was the same.

The 2001 changes to the federal law forced states to create their own estate tax or repeal the tax altogether. Over time, 32 states have chosen to repeal their estate or inheritance taxes.

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