Economist Arthur Laffer urged Tennessee lawmakers on Monday to follow up repeal of the state inheritance tax — a bill that has already assured of passage — with a cut to the state’s tax on gifts, which he said curbs economic growth.
From Chas Sisk’s report:
Laffer told the legislature’s Joint Fiscal Review Committee that the state’s gift tax should be eliminated immediately. The Nashville-based economist has been pushing for repeal of Tennessee’s estate and gift taxes, which he says cause rich retirees to move to states where they can pass on their wealth to heirs tax-free.
“Tennessee’s performance has been very poor, and the reason it’s been poor in my view … is because of the gift and estate tax,” he said. “You’re taking that very small group of people, the crème de la crème of the job creators, and forcing them to leave. By doing that, you’ve really held down the growth rate.”
….Laffer told lawmakers Monday that they should continue with repeal of Tennessee’s gift tax, which kicks in whenever a Tennessee resident gives a family member goods and cash worth more than $13,000 in a year or a nonrelative more than $3,000. The tax starts at 5.5 percent, tops out at 16 percent, and brings in about $15 million a year.
House Finance Committee Chairman Charles Sargent, who has filed legislation to repeal the gift tax, indicated he would like to pursue the idea. Speaking as if a gift-tax repeal were a foregone conclusion, Sargent, R-Franklin, asked Laffer when the state would see the benefit.