So-called ‘death tax’ called a barrier to business growth

If there’s nothing more certain in life than death and taxes, lawmakers would like to at least do something about taxes – specifically what’s known as the death tax.

Charged on heirs upon the death of a decedent, the House Taxes Committee Thursday heard three bills that would either raise the threshold for when an estate tax is owed or completely eliminate the tax.

Bruce Morgren, a Maplewood business owner, said the estate tax is unfair and forces many to bring their assets to states that don’t have the charge. “We’ve created this [business] through hard work and diligence. But for the state to come in after I pass, it’s like the mob. You died and you’ve got nine months to come up with the money, or we’ll come in and start taking it.”

Rep. Peter Fischer (DFL-Maplewood)

HF77, sponsored by Rep. Peter Fischer (DFL-Maplewood), would increase the threshold value of property that is exempt from the estate tax to $5 million. The current exemption is $1.9 million for calendar year 2017 and is scheduled to increase to $2 million in later years. Minnesota is among 14 states that have an estate tax.

Fischer said he was mindful of the stresses on the state’s General Fund and that his measure, while not conforming to federal tax provisions, would bring some relief. His bill, along with HF18, sponsored by Rep. Jenifer Loon (R-Eden Prairie), and HF85, sponsored by Rep. Joe McDonald (R-Delano), were held over for possible omnibus bill inclusion.

The estate tax is a bipartisan burr under the saddle. It is seen as a deterrent to business growth in the state because, upon death, it is charged on property the person has accumulated.

“We tax while you’re living, and then we tax when you are dead - that’s not Minnesota nice,” said Rep. Greg Davids (R-Preston), the committee chair. He called the tax “an evil charge.”

WATCH Full video of Thursday's meeting of the House Taxes Committee

However, as with every tax decision, it boils down to priorities, said Rep. Paul Marquart (DFL-Dilworth). The bills would give relief to about 1,100 taxpayers, but would mean up to $175 million less to the General Fund in each fiscal year.

Marquart said he’d rather see relief “that could affect millions of people,” such as taxes paid on property, social security or credits for those carrying student loan debt and for the working family credit.

“The reality is, what are our priorities? ... They are good bills, but can we afford ‘em. This should not be our top priority.”

A companion to HF77 is SF8, sponsored by Sen. Chuck Wiger (DFL-Maplewood); SF83, sponsored by Sen. Bruce Anderson (R-Buffalo), is the companion to HF85. Each awaits action by the Senate Taxes Committee. HF18 has no Senate companion.