Maryland General Assembly passes estate tax relief

Correction: Earlier versions of this article incorrectly said that the version of Jake’s Law that passed the House of Delegates eliminated a requirement that information from a suspected distracted driver’s mobile device be surrendered to police. In addition, the story should have said that because of the differences in the versions of the bill passed by the House and Senate, the legislation must be reconciled in conference before it can go to the governor’s desk.

The Maryland Senate passed a bill Thursday to allow affluent residents to avoid taxes on a greater portion of the wealth they leave when they die, heeding concerns expressed by some lawmakers that tax burdens were prompting people to move out of state.

The Senate also passed a bill to increase penalties for drivers who cause serious crashes while using a hand-held mobile device. But the Senate changed the bill considerably from what had been passed by the House of Delegates; the two versions will need to be reconciled before going to Gov. Martin O’Malley (D) to be signed into law.

The estate tax measure, which has passed the House, would gradually raise Maryland’s $1 million estate tax exemption to match that of the federal government’s, which was $5.25 million last year. The exemption is the amount of wealth that is not subject to the tax.

In arguing for the bill, Senate Minority Leader David R. Brinkley (R-Frederick) cited an analysis of IRS data by the Web site howmoneywalks.com that found that Maryland lost more than $7 billion in taxable income between 1992 and 2010, mostly to Florida.

Sen. Ronald N. Young (D-Frederick) and other supporters of the law said many millionaires in the state move elsewhere when retirement approaches, in part to avoid the estate tax. These lawmakers argued that the taxes that would be generated if more of those residents stayed in Maryland would compensate for the expected loss of estate tax revenue.

“This will help keep some of them here,” Young said.

Opponents, however, argued that the measure would open a hole in future budgets of more than $100 million a year. They said evidence of widespread migration by wealthy Marylanders to states with a lower estate tax was largely anecdotal, and could be better explained by other factors, such as the warmer climates in some of those states.

Sen. Paul G. Pinsky (D-Prince George’s) said one reason Maryland has a high number of millionaires per capita is that the state puts its taxes to good use building infrastructure and educating its people. Several states with lower tax burdens, particularly farther south, are less desirable because their services are inferior, he said.

“I’m concerned, if we pass this, of losing millionaires because it sends the message that we don’t want to invest in infrastructure, in education . . . in roads and other aspects of quality-of-life issues in their state,” Pinsky said.

The bill was supported by both House of Delegates Speaker Michael E. Busch (D-Anne Arundel) and Senate President Thomas V. Mike Miller Jr. (D-Calvert).

Miller told the Senate that he supported the bill reluctantly and only because he thought it would enhance Maryland’s economic competitiveness.

Maryland and New Jersey are the only states that impose both an estate tax, which is imputed against the possessions left behind after a person dies, and an inheritance tax, which is calculated on the portion of an inheritance received by an heir and assessed to that heir. Maryland has offsets for the two taxes to avoid double taxation. In 2014, the state is expected to take in nearly $153 million in estate taxes and almost $51 million in inheritance taxes.

The increase in the estate tax exemption would be phased in over five years, starting with an increase from $1 million to $1.5 million in 2015. The Department of Legislative Services, in its analysis of the bill, said the state would lose $21.3 million in revenue in fiscal 2016 and nearly $105 million by 2019 as a result of the change.

The Senate passed the measure Thursday by a vote of 36 to 10. The House vote on March 7 was 119 to 14.

The Senate vote to approve the anti-texting measure known as Jake’s Law was unanimous. The bill, sponsored by Sen. Roger P. Manno (D-Montgomery County), would impose a prison sentence of up to three years and a fine of as much as $5,000 on a driver whose texting caused a crash resulting in serious injury or death.

The Senate measure passed after Sen. Joseph M. Getty (R-Carroll) amended the bill to clarify that the penalty enhancement would apply only to texts, not voice calls, and only to those texts produced manually.

A provision that required the driver to allow police to inspect the device and require the motorist to surrender certain information about it also was removed from the final bill of the Senate bill.

John Wagner has covered Maryland government and politics for The Post since 2004.
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