Earlier today, in a show of broad bipartisan support, the House Finance Committee cleared the way for repealing North Carolina’s so-called “Death Tax.” The vote was 24 to 10.
The legislation, HB101, sponsored by Representatives Susan Martin, Julia Howard, Tim Moffitt, and Mitchell Setzer, would finally eliminate this widely unpopular tax — which bill writers believe punishes growth, success, and hard work.
When a resident of North Carolina passes away, the state currently levies a tax of up to 16 percent on assets over $5 million (and everything else the deceased owned — including businesses, homes, land, farm animals, and bank accounts) sometimes forcing families to sell all or part of their businesses to pay the tax. Because folks have already paid taxes on these items as they were acquired, in effect, individuals are taxed twice on the same investments. This double-tax is in addition to the Federal estate tax of 40%.
Research has shown that the Death Tax has a disproportionately large impact on both family-owned farms in North Carolina (agriculture remains our state’s leading industry) and other family-owned businesses which typically invest in land and assets over long periods of time. “Our farmers are the backbone of North Carolina — they get up early and work hard so they can put food on our tables,” commented Representative Martin, who campaigned on repealing the Death Tax last year. “But our family-run farms and farmers are being punished by the “death tax” which double-taxes their profits after they die and forces families to sell their farms to pay the tax.”
It’s widely believed that eliminating this Death Tax will also make North Carolina a more attractive place for individuals to relocate or retire to and make our state more regionally competitive for investment, economic development, job creation and growth. North Carolina and Tennessee are the only states left in the entire southeast that still levies a Death Tax, and Tennessee’s will expire in 2016. Middle and low income families will not be impacted by this change.
“All citizens will benefit from increased economic activity that will come to our state as a result of this repeal,” continued Representative Martin. “More jobs will be created, more capital will come to our state, and more opportunities will exist for low-income earners to advance. We want a simpler, pro-growth tax code. Eliminating the Death Tax is the right thing to do.”
HB101 now moves to the Appropriations Committee to be considered in the budget process for 2013.