House lawmakers consider phasing out estate tax

They say you can’t take it with you, but there are laws about how much you can leave behind.

Such as estate taxes, which apply to the transfer of property when it’s passed from someone recently deceased to a designated heir. It’s called the estate tax because it’s paid by the estate of the deceased before it’s passed on to an heir.

Rep. Greg Davids (R-Preston) wants to get rid of it. But not all at once.

The House Taxes Committee chair sponsors HF170, which would reduce the rates imposed under the estate tax by 1.6 percentage points per year, over a 10-year period, until each rate is zero. In other words, a 10-year phaseout of the estate tax.

“You go out there, you work your tail off, you earn a bunch of money and you’ve got this estate,” Davids said Thursday. “You pay taxes on it all the way. … And then you’re dead, and we hit you again. That’s just not very nice.”

After a vigorous debate that pitted the interests of family farms against those of the wealthiest Minnesotans, the bill was laid over for possible inclusion in an omnibus tax bill.

The Revenue Department estimates the gradual change would mean that $11.9 million less in tax dollars would enter the state’s General Fund in fiscal year 2026 before increasing to $116.1 million in fiscal year 2029.

Rep. Andy Smith (DFL-Rochester) said the committee has many tools of taxation that could help family farmers and questioned whether a complete repeal of the estate tax was the best route, considering that it would also significantly benefit “the exceedingly wealthy.”

“There is an incredible amount of wealth that is about to transition,” Smith said. “Twenty trillion dollars or more over the next couple decades. And it is continually being focused on fewer and fewer people.

“A transfer of wealth between generations based on circumstances of your birth, we have a name for that,” Smith continued. “It’s called aristocracy. And it’s something that our founders were exceedingly against. Because they saw it as a complete expansion of inequality in our society.”

Rep. Bobbie Harder (R-Henderson) said that, as a small farmer, she felt that she was “being attacked.”

“Our profit margins are tight, really tight,” she said. “I don’t want to sell my land. I’m a third-generation family farmer. It’s a legacy. … I appreciate bringing forth any bill to lower taxes.”