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Senate GOP seeking cuts in inheritance tax
Thursday, March 02, 2000 By Peter Durantine, www.capitolwire.com
HARRISBURG -- With broad support from caucus members, Senate Republican leaders plan to negotiate for a cut in the state's inheritance tax when budget deliberations begin this spring between the Ridge administration and the Legislature.
The push comes despite GOP Gov. Ridge's proposal to cut $644 million in taxes for low-income families, businesses and homeowners, including a $330 million property tax rebate. Ridge's 2000-01 budget proposal does not call for any cuts in the inheritance tax.
"We are very strongly pushing for that to be a part of the package," said David Atkinson, executive assistant to Senate President Pro Tem Robert C. Jubelirer, R-Blair. "There's widespread support in our caucus for reductions in the inheritance tax."
No one is stating figures, but sources said Senate members want about a $100 million reduction in the tax that would effect lineal and nonlineal descendants.
They believe an inheritance tax cut in addition to Ridge's proposals is possible because they anticipate a larger surplus than projected.
In the House, which Republicans also control, Majority Leader John Perzel of Philadelphia has focused on the $330 million property tax rebate that Ridge proposed, even though caucus members have sponsored bills to phase out the inheritance tax.
"He believes we need to address the property tax rebate first," said Steve Drachler, Perzel's spokesman.
Ridge believes his tax cut proposals are a higher priority. Even though he supports an inheritance tax cut, it's doubtful at this time that there will be money available, said Tim Reeves, the governor's spokesman.
Sen. Melissa Hart, chairman of the Senate Finance Committee, who has been a strong advocate for cutting the inheritance tax, sent Ridge a letter expressing disappointment in his decision not to provide some relief.
Hart said that demand for a cut is shown by its bipartisan support and "by many advocacy and trade groups."
At a rate of 6 percent on assets left to descendants and 15 percent for all others, Pennsylvania's inheritance tax rates are among the highest in the nation, Hart said, noting only Connecticut relies more heavily on money taken from survivors.
Legislation that Hart sponsored, SB185, was reported out of her committee last spring. It would reduce the inheritance tax rate transfer to siblings from 15 percent to 6 percent to save taxpayers $88.4 million in fiscal 2000-01. A new measure, SB1099, would phase out the 6 percent lineal descendant rate through 2005, costing the state about $52 million per year.
All the presidential candidates promise to abolish the federal inheritance tax, but Pennsylvania must phase out its levy because outright elimination would leave a hole in the budget about $760 million deep.
The federal government taxes only estates valued at more than $650,000, while the state taxes every dollar of any estate.
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