AUGUSTA, Maine — A bill that would eliminate the state’s tax on inheritances worth more than $5 million gained approval in the Republican-controlled Maine Senate on Wednesday with an 18-13 party-line vote.
But the GOP victory is likely to be short-lived as the vote follows a Tuesday decision by the Democrat-controlled House that rejected the repeal of the tax that would cost state coffers about $15 million per year.
Senate Majority Leader Garrett Mason, R-Lisbon, said the division on the issue was one of the key philosophical divides between his party and that of the opposition.
“This is a very key thing that Republicans believe is important to address,” Mason said during a speech on the Senate floor.
He added that state government in Maine, which is among 19 states that still have an estate tax, was wrong to believe it deserves a cut when somebody dies.
“I think the question is — this money was never the government’s to begin with,” Mason said.
He also said that estates were accumulated wealth that belongs to people who previously paid income, sales and property taxes.
Other Republicans were less diplomatic in describing their disdain for the state’s inheritance tax policy.
“I’m just going to ask this body to think about what we subject grieving families to, when the government swoops in as a vulture and picks at what is left over,” said Sen. Eric Brakey, R-Auburn.
Democrats, voting in opposition to the tax cut, said lawmakers last year increased the exemption amount from $2 million to the federal exemption level of $5.45 million. They also noted that supporters of the bill had not produced an alternative source of revenue to fill the estimated $15 million hole in the state budget eliminating the tax would produce.
Sen. Nate Libby, D-Lewiston, said the tax break would only affect about 60 Maine families, who would be passing on an estate valued at more than $5 million. Libby said that amounted to a $250,000 per family tax cut.
“In my years in the Legislature, I’ve never seen such an enormous tax cut being directed to such a small number of Maine families,” Libby said.
Other lawmakers noted that about half of those families were out-of-state property owners.
Libby and Sen. John Patrick, D-Rumford, both said very few, if any, of their constituents, were subject to the estate tax.
Patrick said he believed eliminating the revenue from the state budget would just push more costs to municipal government and onto the backs of already overburdened property taxpayers.
Patrick, who represents much of northern Oxford County said each state senator represents about 37,000 people, and the vast majority of those people would not be inheriting over $5 million.
“The thing that my constituents have been complaining adamantly about for the last four to five to six years is that their property taxes are going up,” Patrick said, noting why he would vote against the bill.
The Senate vote Wednesday sends the bill back to the House, where it is likely to again vote to kill the proposal bouncing the bill back to the Senate for another vote. But with less than a month left before the Legislature is set to adjourn on April 20, it’s unlikely Democrats and Republicans will reach a compromise on the measure.
Gov. Paul LePage also has advocated elimination of the estate tax, saying it encourages wealthy Mainers to retire elsewhere and to take their money with them.