News Release
Reduction in Estate Tax Will Hurt West Virginia
December 13, 2008 -- West Virginia is
missing an opportunity to invest in its people and make its tax
system more fair for a majority of families. Because West
Virginia is linked to the federal reduction of the estate tax,
state lawmakers are allowing a tax cut that benefits only those
families wealthy enough to pass on large fortunes to their
children.
A new report issued by the Washington DC-based Citizens for Tax
Justice (CTJ) shows the estate tax affects little more than
one-half of one percent of all Americans. In West Virginia, that
figure is four-tenths of one percent. In 2007, 20,676 West
Virginians died and only 76 had taxable estates.
President-elect Barack Obama proposes to change the law enacted
by President George W. Bush in 2001 that gradually repeals the
estate tax. Obama’s proposal would prevent the estate tax from
disappearing but would adjust the tax to maintain the tax at its
2009 levels.
Low- and moderate-income families in West Virginia pay a higher
portion of their income in state and local taxes than do
high-income taxpayers. When federal deductions are taken into
account, the highest-income families pay less than 7 percent in
state and local taxes, while most families pay over 9 percent.
“West Virginia lawmakers could follow the lead of 23 other
states by enacting a state estate tax that isn’t linked to the
federal estate tax,” said Ted Boettner, executive director of
the WV Center on Budget and Policy. “The state could use the
estate tax to enact a state Earned Income Tax Credit that would
not only make our state tax system less regressive but help
low-income working families that are struggling to make ends
meet.”
Before President Bush’s 2001 law went into effect, West Virginia
had a state estate tax that collected $21 million in 2000. But
the state estate tax was linked to a credit in the federal
estate tax, and when that credit was repealed in 2001, that
caused the state estate tax to automatically disappear.
The federal estate tax was enacted in 1916 to prevent an
unhealthy concentration of economic and political power in the
hands of a super-wealthy elite, noted CTJ Director Robert S.
McIntyre. “Repealing this tax—would remove this important
backstop and open the floodgates to a new wave of wealth
inequality.”
The report is available in its entirety at:
http://www.ctj.org/pdf/estatetax20081203.pdf