Dear Chairperson Zalewski,
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, I write to express our support for two tax proposals currently before your committee. These pieces of legislation, HB 1454 and HB 1487 would deliver tax relief to taxpayers, small businesses, and family farms across Illinois by repealing the Illinois estate and generation-skipping transfer taxes. Enacting these measures would provide an incentive for taxpayers to stay in Illinois during their later years. We urge you to stand with taxpayers and support these measures, and call for their swift passage.
Illinois has one of the more complicated estate tax structures in the United States, making it difficult for taxpayers and estate planners to arrange for their future. The estate tax in the Land of Lincoln features twenty rates and brackets, beginning with rates at 0.8 percent and climbing as high as 16 percent on taxable estates above a $4 million exemption threshold. Having a state-levied estate tax leaves Illinois at a self-inflicted competitive disadvantage for investment. Illinois is already suffering from wealth-flight to more tax-friendly jurisdictions, and keeping this tax in place only encourages wealth relocation.
Although it constitutes less than three-quarters of one percent of total state tax revenue, this levy leaves a stinging mark on Illinois’ economy. Estate taxes have significant compliance costs and have been shown to suppress entreneurship and property ownership. The reason for such significant economic harm is that the estate tax is a poorly targeted tax that disincentivizes activities that promote economic growth. Rather than dispersing capital into new equipment or workers, actions that are essential for sustainable economic growth, older Americans with sizeable estates are encouraged to spend as much of their money as possible to avoid the tax.
The death tax threatens small businesses and farms that are passed down through generations, many of which do not have liquid assets to pay the substantial price tags both Illinois and the federal government have placed on inheritance. The results include the inability to reinvest in the business’s future success, laid-off employees, and buy-outs by larger entities. By punishing thrift, savings, and hard work, the estate tax stifles the very attributes that are necessary to ensure America’s future prosperity.
Eliminating the estate tax, which many states have done in recent years, would create immediate relief for taxpayers, and especially for farmers and small business owners. NTU is pleased to endorse HB 1454 and HB 1487 we urge all committee members to support these proposals.
Sincerely,