House votes to remove inheritance property tax

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HARRISBURG -- Lawmakers last night moved a step closer to eliminating the so-called death tax imposed on heirs.

In a 163-29 vote, House members agreed to phase out the tax over four years. The legislation now heads to the Senate.

Opponents say the measure is irresponsible because it includes no provision to make up for lost tax revenue, which would amount to about $635 million annually when the phase-out is complete in 2010.

"The Republicans want to cut something without having the money to pay for it," said Minority Leader Bill DeWeese.

"This just doesn't make good sense, especially when my honorable colleagues on the Republican side want to cap state spending. ... You can't have it both ways."

Supporters of the phase-out plan have said that lower taxes would stimulate the economy and help keep family businesses in operation.

Currently, inherited property is subject to a one-time tax of up to 15 percent of the property's value.

The rate varies depending on the beneficiary's relationship to the deceased. For example, the rate is 4.5 percent for children, grandchildren, parents and grandparents; 12 percent for siblings and 15 percent for most other heirs. Widows and widowers do not pay the tax on property inherited from their spouses.

Eight other states have an inheritance tax.

Tracie Mauriello can be reached at or 717-787-2141.


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