Reducing or eliminating Pennsylvania‟s inheritance tax has been a favorite cry of state lawmakers for decades. But few changes to the tax have been made principally because it raises over $800 million a year in General Fund revenues.
Now the House Finance Committee is looking into numerous bills that restrict or eliminate the tax entirely. It‟s unclear when or if any measure will move beyond the committee.
“Nearly everyone on both sides of the aisle say the tax is unfair but doing something about it is another matter because of the revenue loss,” said one House member
Those typically hurt the hardest are small family owned business, including farmers.
“It‟s really tough on those who are property rich but cash poor,” said Donna Pinkham, spokesperson for the House Republican Caucus. “That‟s what members are trying to address.”
The legislation with perhaps the best shot of approval is one that would exempt the first $250,000 of the inheritance from the tax. Under current law, all transfers to beneficiaries are taxed.
Sponsor of the bill, Dan Moul, R-Adams, said that his legislation will ease the burden on Pennsylvania's family farmers and businesses that pass their livelihood on to their children.
“House Bill 1103 will exempt most people in the Commonwealth from paying an inheritance tax," Moul said.
The tax rate is 4.5 percent for transfers to direct descendants, 12 percent for transfers to siblings and 15 percent for transfers to other heirs.