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NEWS

Estate tax on cutting block

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by Douglas Schuette

Wednesday, March 21, 2007

In a public hearing today, legislators will discuss repealing Wisconsin's estate tax, which requires representatives of deceased persons to file their unfinished income tax returns.

The estate tax is often confused with inheritance taxes, which assess an individual heir's inherited portion of an estate. Wisconsin does not generally tax inheritances.

Proposed by Assembly Republicans, the bill would hasten the tax's sunset, currently scheduled for Jan. 1, 2008.

According to the nonpartisan Legislative Reference Bureau, "due to changes in federal law, [the tax] will revert to an earlier form, thereby effectively repealing the estate tax in Wisconsin."

Today, the bill will be addressed by members of the Assembly's Ways and Means Committee, chaired by state Rep. Samantha Kerkman, R-Powers Lake, one of the bill's co-sponsors.

Kerkman said the estate tax makes it difficult for family farms and family-owned small businesses to be passed down to the next generation.

"When you pass away, you want to be able to hand something on to your loved ones," Kerkman said.

Many families cannot afford to keep their farms, Kerkman added, because "the kids can't afford the tax burden that goes along with it."

Fellow committee member Rep. Gary Hebl, D-Sun Prairie, said while he favors repealing both federal and state estate taxes, cutting the state revenue would force increases in other areas.

According to the Wisconsin Department of Revenue, repealing the state's estate tax could amount to a $100 million loss in annual revenue.

"You have to look at where your income is coming from, and if you eliminate one of those sources, you've got to find it someplace else," Hebl said, noting alternatives such as increases in income or sales taxes.

"Either that, or we have to spend less money," Hebl added.

According to Hebl, the bill will not likely garner enough support due to the funding vacuum that would be left in other areas.

Kerkman said she is optimistic for the bill's future in the Assembly, but admitted, "It still has quite a few hurdles to go through," including the Democrat-controlled Senate and a possible veto from Gov. Jim Doyle.

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