NC Budget and Tax Center

Eliminating estate tax provides tax cut to North Carolina’s wealthiest individuals

Comprehensive tax reform remains vague and “short on details” as the 2013 legislative session is beyond its halfway point. Nevertheless, stand-alone bills continue to make their way through the legislative process that would provide tax cuts to the state’s wealthiest individuals. Policymakers have just voted in the House to eliminate the estate tax and both the Senate leadership and the Governor have stated their commitment to do the same.

Proponents of eliminating the estate tax argue that the tax punishes small businesses and small farms in North Carolina. Evidence shows this claim to be false. The estate tax applies to a small number of taxpayers in North Carolina – less than one percent. For tax year 2011, only 23 North Carolina tax filers were subject to the estate tax, according to the North Carolina Department of Revenue. The reality is that the overwhelming majority of small businesses and small farms will not a pay an estate tax while heirs of the wealthiest estates in the state will.

Moreover, the claim that small, family-owned farms would have to sell their farms to pay the estate tax does not align with available evidence. For 2013, the amount of an estate’s value that can be excluded for tax purposes increased to $5.25 million. The Tax Policy Center estimates that only 20 small businesses and farm estates nationwide are estimated to owe any estate tax in 2013 – this equates on average to less than one small business or farm per state.

Efforts to eliminate the estate tax will only further the tax shift underway through other proposals that offer tax cuts for wealthy individuals and corporations while shifting the tax load to low- and middle-income taxpayers. For example, at the same time that the estate tax is being eliminated for 23 estates, the state Earned Income Tax Credit (EITC) is slated to be cut for FY2013 and will expire at the end of the year, which will impact nearly 907,000 North Carolinians. Such efforts do not support growing the economy and certainly do not promote economic opportunity for all North Carolinians.

8 Comments


  1. Doug

    May 9, 2013 at 10:47 am

    It will be a good thing to get rid of…..for such small numbers I am sure it takes thousands of bureaucrats to administer. The government will probably save money in the long run not having to administer the death tax.

  2. Doug

    May 9, 2013 at 10:55 am

    PS……Yeah, for collections of just $23 million in 2011….this tax likely is more of an overall drag on the state government, and an unneeded cost for the overall number of returns that have to be filed. Now it does happen to enrich CPA’s as I would think even a simple return is at least $500…..so that is one benefit.

  3. RJ

    May 9, 2013 at 10:56 am

    OK, here’s where I call out “Doug” as not being an accountant: he posits that it takes “thousands of bureaucrats” to administer NC’s estate tax. A quick google search tells me that the entire NCDOR has about 1400 employees, total.

    Wouldn’t an accountant have some sense of the scale of the size of the NCDOR? I’m just a schlub that does his own taxes and I smelled that rat immediately.

    In short, grow up.

  4. jlp75

    May 9, 2013 at 11:26 am

    Don’t be so hard on Doug his only source of information is his rear orifice and you know what those are full of.

  5. david esmay

    May 9, 2013 at 2:26 pm

    Who would employ Doug as their accountant? Like all neo-con Krystolites who think government should be run like a business, and yet think reducing revenue is good for the business, or want to shrink the business so they can drown it in a bathtub, don’t realize their ideological dogma is biting their reasoning in the arse. It’s like talking to Mao’s Red Guards at the height of the Cultural Revolution, the Repubs are lost in their archaic simpleton platitudes and have a romantic vision of themselves as Adam Smith traipsing through the heather, when the reality is they’ve never met a retrogressive right-wing social experiment they didn’t love.

  6. Doug

    May 9, 2013 at 8:40 pm

    RJ
    So you admit there are thousands of people at the NCDOR…..thanks for doing my research…..someone finally took the time to use that google thing. I am impressed.

    Also, I do not do taxes or deal with the DOR either. There are accountants that do other things out there other than taxes.

  7. Doug

    May 9, 2013 at 8:42 pm

    I should have said…don’t do taxes any more….in a past life I did. Guess that was where I got my “love” of government from…..left that part of the profession pretty fast.

  8. RJ

    May 10, 2013 at 12:37 pm

    Mmm, so you’re the type of accountant who thinks 1400=”thousands”… That doesn’t really change my mind about your charade.

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