Haslam: Eliminating Inheritance Tax Will Increase State Revenue

Gov. Bill Haslam tells the Chattanooga TFP that ending the state’s inheritance and gift tax will generate more money for Tennessee than what it will cost the state’s tax coffers.
The Tennessee Legislature this year voted to phase out the state’s inheritance and gift taxes. The Volunteer State was one of 19 states that taxed estates. Connecticut is the only other state to impose a state tax on gifts.
“Ending the inheritance tax will leave more capital in the state, and the more capital we can get to come or stay in our state the better it will be for Tennessee,” Haslam told reporters and editors at the Chattanooga Times Free Press. “I do think we’re headed in the right direction in Tennessee, and I feel very good about where we are competitively among the states.”
The Tennessee Department of Revenue estimates the state will lose an estimated $104.1 million in revenue annually when the inheritance tax is fully eliminated by 2016. The gift tax will end July 1, costing the state about $15 million a year.
But Haslam said ending such taxes should encourage more wealthy people to reside in Tennessee and not flee to other states that don’t impose such taxes. Dr. Arthur Laffer, a former economist for the late President Ronald Reagan, estimates Tennessee’s economy would have been 14 percent larger with 200,000 more jobs had the state not had an estate tax and more wealthy individuals lived in Tennessee.
Already, developers such as the Tennessee Land and Lakes are touting the repeal of the state’s estate tax in their marketing appeals to seniors to buy properties on Tellico Reservoir.

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