Steven Moore
On February 21, 2018, The Center of the American Experiment hosted Stephen Moore for a luncheon in Minneapolis using the above heading.
Mr. Moore presented three main points or suggestions for Minnesota to the audience. Number One was the concept of a Right to Work state. Number Two was to scrap our individual income tax and replace it with a 5% flat tax. The third was the elimination of the Minnesota estate tax.
All are great ideas that would bolster the Minnesota economy.
More taxes or a higher tax rate does not always mean more tax revenue. At some point, those being battered by the highest rates may choose to leave this state if they cannot offset the tax increases in other ways.
The same is true for estate taxes. At the federal level, you can’t escape them but the Tax Reform and Jobs Creation Act doubled the federal estate exemptions to $11+ million per person thus exempting most Americans from federal estate taxes. States, however, may impose their own and if they do or have, then battle lines are set up.
Wisconsin, North Dakota and South Dakota do not have an estate or inheritance tax. Iowa has an inheritance tax but exempts lineal descendants. Minnesota does have an estate tax with an effective rate pretty close to 12% and a top rate of 16%. Florida, Arizona, and Texas do not have estate taxes. Even California under Governor Reagan got rid of their estate tax.
Minnesota has a limited estate tax exemption that’s working its way up from $2 million to $3 million and it has a nasty claw-back of up to three years. These are not inducements to keep Minnesotans who have accumulated some money to stay here. Economic logic would be to keep these people here; tax their incomes, their purchases, their real estate and other hidden and not so hidden taxes we all pay. Keep them here and have them contribute to the Minnesota economy and job support.
The estate tax brings in less than one percent of federal taxes and does the same for taxes in Minnesota-less than one percent. It should be abolished. If not, then the exemptions should parallel the federal exemptions and the claw-back needs to go.
We do hope that the legislature and the Governor can come to sensible terms. Failure to do so most likely will mean acceleration in taxpaying wealth leaving Minnesota. That affects us all.
Bob Smith 3rd
GopherStatePolitics.com
February 23, 2018
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