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Sen. Beck Backs New Plan to Triple Estate Tax Threshold to $2.5 Million

Friday, April 22, 2016   (0 Comments)
Share | 04/19/16

A key Republican lawmaker has broken ranks with Gov. Chris Christie on repealing New Jersey’s estate tax, offering a compromise proposal that would keep the tax in place but significantly reduce how many people are hit by it. The new idea being floated by Sen. Jennifer Beck (R-Monmouth) comes as Republicans and many Democrats have been backing a bill that would phase out over several years the tax that New Jersey levies on the estates of those who die here. But instead of getting rid of the estate tax, Beck has proposed more than tripling how much can be exempted from the tax before it is triggered. What remains to be seen now is if Democratic legislative leaders and Christie himself will embrace her idea as talks unfold over the next few weeks on a host of proposed state tax-policy changes. These include a possible increase in New Jersey’s gas tax to replenish the state’s Transportation Trust Fund. Democrats in the Senate have offered to phase out the estate tax in exchange for a gas-tax deal with Christie and other Republicans that would renew the transportation fund, which is on course to run out of money this summer. But so far, a deal has yet to be reached.

Right now, New Jersey is one of only two states to levy both a tax on someone’s estate when they die and a tax on an inheritance that is left to someone other than a direct relative or charity. He’s also pointed to the estate tax frequently when asked by reporters in recent weeks about Democratic legislative leaders’ calls for hiking the gas tax, saying lawmakers should be looking at overall “tax fairness.” The 14.5-cent gas tax is a primary source of revenue for the transportation fund, which pays for more than $3 billion in annual road, bridge, and rail-network improvements, counting federal matching dollars. Bipartisan legislation that would phase out the estate tax over a period of five years cleared a key Senate committee in early March. But Assembly Speaker Vince Prieto (D-Hudson) said yesterday that he would only be willing to look at such a change if it was included in a much bigger deal to renew the transportation fund.

Such a change would mean nearly 90 percent of those currently subject to the estate tax would no longer have to pay it, including many farmers and small-business owners, she said. Lifting the threshold over time up to a $2.5 million exemption would also bring New Jersey more in line with neighboring states like New York and Connecticut, which have thresholds of $3.125 million and $2 million, respectively. “Increasing our exemption to $2.5 million would have the same effect as eliminating the estate tax completely for most people,” Beck said. The data collected by the nonpartisan legislative analysts also suggests that the hit on state revenues would be much less than an outright repeal. Nearly $200 million came in from estates worth $2.5 million or more during the 2014 fiscal year, according to the OLS research. Christie has previously praised a plan that Beck came up with for renewing the Transportation Trust Fund that doesn’t rely on hiking the gas tax. Instead, she would combine expected growth in other state-tax collections with new revenue from proposed higher fines on things like drunken driving and texting while driving to extend the fund for seven years.

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