The Maryland Taxpayers Association, Inc.

August 1, 2005

Dear Maryland Taxpayer:

Two Maryland governors, Glendening and Ehrlich, signed legislation (in 2002 and 2004) "decoupling" taxpayers from Maryland estate tax relief they would have otherwise received through the enactment of president Bush's tax cuts. (Discussion of these two death tax "decouplings" begin on page 19 of the revised Fiscal and Policy Note accompanying SB508 in the 2004 session of the General Assembly.)

But one Maryland state senator, Janet Greenip, this year made a serious and thoughful effort to restore Maryland death tax relief. No good turn goes unpunished. The Annapolis political class was outraged that she made the Maryland Senate go on record on death taxes. Her death-tax-relief floor amendment failed of adoption 30 to 17. Republicans Hafer and Munson voted to continue keeping Maryland a citadel of death taxes while Democrats Klausmeier, Kramer, Brochin, Della, and Stone supported Greenip's efforts to lighten the state death tax load substantially.

A Wall Street Journal editorial, "Estates of Pain--Connecticut's governor to constituents: Get out of here before you die" (see extracts below) tells of some of the consequences when states raise estate taxes: they lose many of their most productive citizens (and biggest taxpayers).

MTA would add that the families of minorities and new Americans with businesses suffer severely by such taxes. The Heritage Foundation's William Beach explains:

"Minorities, many of whom wish to raise their families in ethnic communities, understand well the virtues and promises of self-employment. Yet the financial security that family-owned and small businesses provide these Americans is put at risk if the owner dies with a taxable estate."

Elected officials in Annapolis must begin putting economic horse sense first. One way to see that they do is to add a Taxpayers Bill of Rights to the Maryland Constitution.

Best Wishes.

Dee Hodges, president
Richard Falknor, executive vice president
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"REVIEW & OUTLOOK

"Estates of Pain
Connecticut's governor to constituents: Get out of here before you die!

Monday, August 1, 2005 12:01 a.m. EDT

Florida Governor Jeb Bush ought to send his counterpart in Connecticut, Republican Jodi Rell, a thank-you note with a box of chocolates and a ribbon tied around it. Last month Ms. Rell marked her first anniversary as Governor by signing into law a tax bill that might as well be called the 'Palm Beach Economic Development Act.'

The law requires that any resident of the Nutmeg State with an estate of more than $2 million pay a death tax of up to 16%--merely for the privilege of dying in Connecticut. The legislators in Hartford hope that the tax will raise $150 million in revenue each year--money that will come in only if the legislators in Hartford are also planning to build a Berlin Wall around the state.

Otherwise, expect a stampede of retirees and family businesses out of Connecticut into the many states without a death tax, such as Florida, which has a constitutional prohibition against estate taxes. Thanks to the Connecticut death levy, a successful small business owner with a $10 million estate can save about $1 million by packing up and heading south."

Don't Die Here: States with estate taxes

Connecticut, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, Washington, Wisconsin

Source: American Family Business Institute, 2005. States with estate taxes from "Estates of Pain," Wall Street Journal, August 1, 2005.

Check out the entire editorial in the August 1 Wall Street Journal!