Great op-ed by Kim Crockett of the Center of the American Experiment. Please share it with your friends and associates! Bob Smith
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Estate Tax Shoos Away Snowbirds by KIM CROCKETT - Published February 8, 2015-Star Tribune Op-Ed
Of course, they’ve paid their "fair share." And once they go South, they’ll be donating elsewhere.
http://www.startribune.com/opinion/commentaries/291113251.html
In a ritual familiar to many Minnesotans, I recently made plans to visit my mother in Florida. When I called to compare calendars, she surprised me. After just a few months as a new snowbird, she is thinking of becoming a resident of Florida. "We are happy to pay the taxes, but the estate tax is another matter," she said.
Several years ago, my mother and stepdad moved from the Land of 10,000 Taxes back east to "Taxachusetts," where many of her college pals and family members still live. All of her estate planning to this point assumed she’d die a resident of Massachusetts, which has an estate tax similar to that of Minnesota and a dozen other states.
While my mother adores Massachusetts — Sen. Elizabeth Warren and all — she is a thrifty and savvy planner and hopes to leave resources behind, primarily to help a family member with special needs. She is one of those "Happy to Pay" folks, but has found her limit: She is not happy to pay a death tax. Florida has none.
I work for a nonprofit focused on public policy, so this issue is of interest — not just as a matter of good tax policy, but for our organization’s future (and I assure you for the future of every other nonprofit in Minnesota). More important, it is vital for our state’s future.
When I was making calls to donors in December, I had many similar conversations to the one I had with my mother. Too many of the people I reached had either relocated or were thinking about it. In comparing notes with other nonprofits, I found that we are all hearing the same thing: a growing part of our donor base is leaving as baby boomers retire but also as younger, more mobile people are headed to a better climate for taxes or weather, or both. This is laid out in stark detail by data from our state demographer in a report called "Minnesotans on the Move."
One donor told me that when he and his wife retired, they stuck around. This was home. They were looking forward to giving lots of time and money to the Rochester area, including a large donation to a local foundation. Over time, they were deeply offended by the (false) idea that they had not paid their "fair share" in taxes or that somehow they had not earned their success. They knew where they came from and how hard they had worked. Yet my donor stayed, continuing to pay taxes and to give generously to nonprofits.
The tipping point came with the estate tax, which my donor called "a tax on my children." He estimated the cost of Minnesota’s estate tax. Rather than pay the tax, he bought a house in Florida for less than what he would have paid in estate taxes and became a Florida resident. Instead of paying estate tax, his children are going to inherit a five-bedroom house in Florida.
Once people leave the state, they shift their lives and donations to their new communities.
Vance Opperman observed in Twin Cities Business that while Minnesota has a lot to offer, we have a problem: "the constant rhetoric attacking rich people, people that aren’t morally [willing] to pay their fair share, I resent. … And I frankly think the constant effort to harass people of wealth has a secondary but negative effect. When people make their first big hit, their first big capital gain, you want them to stay here. You want them to fund the orchestra, to fund foundations. You want them to continue to contribute to our society, to start venture capital, to invest in new businesses. And if you chase those people out because they think they’re not wanted, or if you chase those people out or you don’t attract people who are mobile, you will have a decline in many of the amenities we’ve just been talking about."
You might be thinking, "Good riddance. Who needs Richie Rich anyway?" I got a full helping of such green-eyed rhetoric last week at the State Capitol. In recognition of the exodus caused by the estate tax, both the Senate and the House are hearing bills that would either repeal the tax (best scenario) or bring the tax in line with the federal estate tax (good enough compromise).
While most legislators seemed to get the problem, during one hearing a state representative mocked the idea of helping "rich guys with three yachts on Lake Minnetonka." Another compared certain untaxed stock gains to a lottery windfall. The estate tax, it was argued, was our defense against an aristocracy.
This is how we end up with family farms and businesses being sold to pay taxes. But I get that fear about accumulated wealth. I worry about it, too. I do not want to be bossed around by Richie Rich, either.
I am reassured by two things. First, most wealthy Americans build and earn their success and then give a lot of it away to hospitals, schools, the arts and even policy organizations. Very few inherit great wealth. When they do, they arrange for their estates to be out of the reach of Minnesota’s estate tax. Second, inherited wealth is often morally debilitating. It’s like people who win the lottery; many end up with nothing — or with serious problems — because they did not earn it.
So I do not worry about aristocracy. I worry about all of the farmers and small-business owners who do not have yachts or untaxed stock gains but instead have lots of valuable acreage or capital equipment that puts them right in Minnesota’s estate tax bull’s-eye. I don’t think they should pay for the farm twice: first in property and income taxes, and again when they have gone to their peace.
I want them and their heirs to stay put and call Minnesota home, to keep working that farm or growing that business.
Of course, they’ve paid their "fair share." And once they go South, they’ll be donating elsewhere.
http://www.startribune.com/opinion/commentaries/291113251.html
In a ritual familiar to many Minnesotans, I recently made plans to visit my mother in Florida. When I called to compare calendars, she surprised me. After just a few months as a new snowbird, she is thinking of becoming a resident of Florida. "We are happy to pay the taxes, but the estate tax is another matter," she said.
Several years ago, my mother and stepdad moved from the Land of 10,000 Taxes back east to "Taxachusetts," where many of her college pals and family members still live. All of her estate planning to this point assumed she’d die a resident of Massachusetts, which has an estate tax similar to that of Minnesota and a dozen other states.
While my mother adores Massachusetts — Sen. Elizabeth Warren and all — she is a thrifty and savvy planner and hopes to leave resources behind, primarily to help a family member with special needs. She is one of those "Happy to Pay" folks, but has found her limit: She is not happy to pay a death tax. Florida has none.
I work for a nonprofit focused on public policy, so this issue is of interest — not just as a matter of good tax policy, but for our organization’s future (and I assure you for the future of every other nonprofit in Minnesota). More important, it is vital for our state’s future.
When I was making calls to donors in December, I had many similar conversations to the one I had with my mother. Too many of the people I reached had either relocated or were thinking about it. In comparing notes with other nonprofits, I found that we are all hearing the same thing: a growing part of our donor base is leaving as baby boomers retire but also as younger, more mobile people are headed to a better climate for taxes or weather, or both. This is laid out in stark detail by data from our state demographer in a report called "Minnesotans on the Move."
One donor told me that when he and his wife retired, they stuck around. This was home. They were looking forward to giving lots of time and money to the Rochester area, including a large donation to a local foundation. Over time, they were deeply offended by the (false) idea that they had not paid their "fair share" in taxes or that somehow they had not earned their success. They knew where they came from and how hard they had worked. Yet my donor stayed, continuing to pay taxes and to give generously to nonprofits.
The tipping point came with the estate tax, which my donor called "a tax on my children." He estimated the cost of Minnesota’s estate tax. Rather than pay the tax, he bought a house in Florida for less than what he would have paid in estate taxes and became a Florida resident. Instead of paying estate tax, his children are going to inherit a five-bedroom house in Florida.
Once people leave the state, they shift their lives and donations to their new communities.
Vance Opperman observed in Twin Cities Business that while Minnesota has a lot to offer, we have a problem: "the constant rhetoric attacking rich people, people that aren’t morally [willing] to pay their fair share, I resent. … And I frankly think the constant effort to harass people of wealth has a secondary but negative effect. When people make their first big hit, their first big capital gain, you want them to stay here. You want them to fund the orchestra, to fund foundations. You want them to continue to contribute to our society, to start venture capital, to invest in new businesses. And if you chase those people out because they think they’re not wanted, or if you chase those people out or you don’t attract people who are mobile, you will have a decline in many of the amenities we’ve just been talking about."
You might be thinking, "Good riddance. Who needs Richie Rich anyway?" I got a full helping of such green-eyed rhetoric last week at the State Capitol. In recognition of the exodus caused by the estate tax, both the Senate and the House are hearing bills that would either repeal the tax (best scenario) or bring the tax in line with the federal estate tax (good enough compromise).
While most legislators seemed to get the problem, during one hearing a state representative mocked the idea of helping "rich guys with three yachts on Lake Minnetonka." Another compared certain untaxed stock gains to a lottery windfall. The estate tax, it was argued, was our defense against an aristocracy.
This is how we end up with family farms and businesses being sold to pay taxes. But I get that fear about accumulated wealth. I worry about it, too. I do not want to be bossed around by Richie Rich, either.
I am reassured by two things. First, most wealthy Americans build and earn their success and then give a lot of it away to hospitals, schools, the arts and even policy organizations. Very few inherit great wealth. When they do, they arrange for their estates to be out of the reach of Minnesota’s estate tax. Second, inherited wealth is often morally debilitating. It’s like people who win the lottery; many end up with nothing — or with serious problems — because they did not earn it.
So I do not worry about aristocracy. I worry about all of the farmers and small-business owners who do not have yachts or untaxed stock gains but instead have lots of valuable acreage or capital equipment that puts them right in Minnesota’s estate tax bull’s-eye. I don’t think they should pay for the farm twice: first in property and income taxes, and again when they have gone to their peace.
I want them and their heirs to stay put and call Minnesota home, to keep working that farm or growing that business.
***
Kim Crockett is chief operating officer of Center of the American Experiment, devoted to Building a Culture of Prosperity in Minnesota and the Nation
