News release from Indiana Senator Jim Banks (R-17th):
Sen. Jim Banks Encourages Committee to Kill Inheritance Tax
Banks says lifting tax could lead to economic growthThe Indiana General Assembly’s Commission on State Tax and Financing Policy met today to evaluate the impact of phasing out Indiana’s inheritance income tax.
I appreciate the commission’s work on this issue and plan to once again introduce legislation to end what is commonly referred to as the “death tax.”
Benjamin Franklin once said, “in this world nothing can be said to be certain, except death and taxes.” When he made that statement, I don’t believe he ever anticipated taxes to follow someone after death. It’s time we joined the vast majority of states who no longer burden residents with this out-dated tax.
The death tax affects those who are residents of the state when they die. The tax is levied against the heir who receives the inheritance-not including spouses and charitable organizations. The legislation I’m proposing calls for a five-year phase out.
Tax rates vary depending on the beneficiary’s relationship with the descendent. For example, children are taxed at a lesser rate than a distant cousin, who would in turn be taxed at a lesser rate than a friend of the deceased.
Indiana is ranked among the worst states in the country for combined state and federal inheritance tax according to data compiled in the Wall Street Journal. The American Legislative Exchange Council (ALEC) ranks Indiana 50th for state inheritance taxes.
The elimination of this tax might also help address another concern facing Indiana-the number of older Hoosiers leaving the state.
By eliminating this burdensome tax, we are encouraging hardworking Hoosiers to retire in Indiana and pass along their wealth to family or friends without the fear of government intrusion.
Eliminating the inheritance tax could also help improve Indiana’s economic climate by encouraging wealth and resources to remain in the state. Indiana is one of a handful of states still collecting this tax. Ohio lawmakers voted to eliminate their “death tax” earlier this year.
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