1. Money
Julie Garber

Lawmakers Propose Eliminating Inheritance Tax on Pennsylvania Businesses

By February 6, 2013

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There are currently seven states that collect an inheritance tax - meaning a tax assessed only against certain heirs who inherit an estate, as opposed to an estate tax, which is assessed against the entire value of an estate - and Pennsylvania is one of them. Last year Pennsylvania lawmakers provided an inheritance tax break to family farms, and this year they're proposing an inheritance tax break for businesses. Since the Pennsylvania inheritance tax is based on the value of the business's assets, including equipment, and not on the business's actual profits, this forces many family-owned businesses to sell off assets, reorganize, take loans, or simply shut down in order to pay the inheritance tax bill.

The Pennsylvania Department of Revenue has estimated that a business exemption from the inheritance tax will cost the state $9.9 million in fiscal year 2013-2014, against an estimated $886 million in total inheritance tax revenue for the same year. The House bill to eliminate the inheritance tax on Pennsylvania businesses has 70 cosponsors and has already passed the House Finance Committee, and a similar bill has also been introduced in the state Senate. Many see this move as part of a broader overhaul of Pennsylvania's business taxes being pushed by Governor Tom Corbett. The state currently has the U.S.'s highest corporate net income tax at 9.99%, and lawmakers are looking to phase down this rate along with continuing to phase out the capital, stock and franchise tax.

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