SACRAMENTO, Calif. (CN) – Warding against the possibility of Congress nixing a lucrative federal estate tax, a California lawmaker on Tuesday announced a measure to ask voters to approve a mirroring state version.
State Sen. Scott Wiener, D-San Francisco, notes the federal estate tax generated $4.5 billion from wealthy Californians in 2015, and that the state version would only be necessary if Washington follows through with scrapping the federal levy.
Wiener claims his measure will help the Golden State recoup valuable tax revenue and accused President Donald Trump and congressional Republicans of being “hell-bent on cutting taxes” for the rich.
“Our state has many needs, and a massive tax cut for the wealthy is not one of them. Let’s keep these estate tax funds working for our community, particularly given Trump’s efforts to cut critical needs such as health care and transportation,” Wiener said in a statement.
Senate Bill 726 would ask voters to repeal a 1982 ballot measure that prohibits state-level estate tax programs. If the federal estate tax is abolished, the state version would allow billions in estate taxes to go directly into California’s coffers.
Since being elected, Trump has hinted at repealing the federal estate tax as part of his larger tax plan. Critics for decades have bemoaned the so-called “death tax,” which taxes inherited estates valued at $5.43 million or above for individuals and nearly $11 million for married couples, calling it a financial roadblock for fortunate heirs.
According to the Internal Revenue Service, California filed more estate tax returns in 2015 than any other state, followed by Florida and New York. The program generated $17 billion in federal tax revenue nationwide, primarily from real estate and stock assets.
The federal estate tax was last repealed by President George W. Bush during his first term, but was revived by President Barack Obama in 2010. Congressional Republicans could pass tax reforms through budget reconciliation procedures, which only require a simple majority but have a 10-year expiration date.
While Wiener says his proposal is simply a method of recovering “critical needs threatened by the current administration,” the Howard Jarvis Taxpayers Association paints it as an impulsive tax increase.
“Any removal of the federal estate tax replaced by a state tax is of course a tax increase, we will treat it as such and we will oppose it,” David Wolfe, the group’s legislative director, said.
Wolfe says voters overwhelmingly rejected a state-level levy in 1982, and that Wiener is jumping the gun with his proposal.
“There’s been no concrete tax reform proposal put in place by the Trump administration,” Wolfe said in a phone interview. “I think it’s extremely premature and just a scheme to increase taxes on a decently large number of Californians.”
Wiener says he will withdraw SB 726 if Congress does not repeal the tax.
“If Donald Trump and congressional Republicans are hell-bent on cutting taxes for our wealthiest residents, we should counter-balance those tax cuts by recapturing the lost funds and investing them here at home in our schools, our health care system, and our roads and public transportation systems,” Wiener reiterated.