Editorial: Inheritance, death taxes are draining the state
(THINKSTOCK)
Last week, we wrote about the Bankrate ranking of the best states in which to retire, and to no one's surprise, New Jersey ranks near the bottom. It's not hard to imagine why — after all, once your hair starts to turn silver, Trenton starts making plans to get its hands on your gold.
If you own a business, especially if you're part of the baby boom generation that's planning to hand everything over to the next generation within the next few years — where you take your wealth after you sell is a serious consideration for you, but also for the state, which loses out on all kinds of property and sales tax revenue when those moving trucks cross the Delaware.
A big reason so many retirees head for the exit? Only two states levy both a death tax and an inheritance tax: Maryland and New Jersey. But Maryland has taken steps to reduce the size of the fangs in its estate tax, whereas the Garden State never met a tax it didn't like. And while New Jersey only taxes estates worth more than $675,000, business owners who've worked all their lives to build a company and provide for their families shouldn't be forced to leave the state where they created their livelihoods just to protect their wealth. And many are unaware they may be leaving their heirs a costly burden until they sit down and hear the news from a wealth planner.
New Jersey has thrown a lot of money at incentives, and a lot of hot air at property taxes and income taxes, but it hasn't done much to address potential death tax reform, though it does come up every so often. It's time lawmakers commit to some serious work here, to help bolster the state's reputation as a good place to retire.
Are death and inheritance taxes the top reason that retirees leave the state? Certainly not, as a comparison of the weather this past winter here and in Tampa will prove. But New Jersey's taxes effectively chip away the many advantages this state does offer to retirees, like the beach and proximity to New York — and family, of course. It would be much easier to remind them of that without their financial planners also reminding them how much money they'll lose when the inevitable happens. We hope lawmakers work to make it so.
If you own a business, especially if you're part of the baby boom generation that's planning to hand everything over to the next generation within the next few years — where you take your wealth after you sell is a serious consideration for you, but also for the state, which loses out on all kinds of property and sales tax revenue when those moving trucks cross the Delaware.
A big reason so many retirees head for the exit? Only two states levy both a death tax and an inheritance tax: Maryland and New Jersey. But Maryland has taken steps to reduce the size of the fangs in its estate tax, whereas the Garden State never met a tax it didn't like. And while New Jersey only taxes estates worth more than $675,000, business owners who've worked all their lives to build a company and provide for their families shouldn't be forced to leave the state where they created their livelihoods just to protect their wealth. And many are unaware they may be leaving their heirs a costly burden until they sit down and hear the news from a wealth planner.
New Jersey has thrown a lot of money at incentives, and a lot of hot air at property taxes and income taxes, but it hasn't done much to address potential death tax reform, though it does come up every so often. It's time lawmakers commit to some serious work here, to help bolster the state's reputation as a good place to retire.
Are death and inheritance taxes the top reason that retirees leave the state? Certainly not, as a comparison of the weather this past winter here and in Tampa will prove. But New Jersey's taxes effectively chip away the many advantages this state does offer to retirees, like the beach and proximity to New York — and family, of course. It would be much easier to remind them of that without their financial planners also reminding them how much money they'll lose when the inevitable happens. We hope lawmakers work to make it so.
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