By Brenda Flanagan
New Jersey’s a state you really don’t want to be caught dead in.
“It is the worst state to die in, from a tax perspective,” said Susan Barbey
The taxes on her mom’s estate horrified Barbey pushed her to launch a one-woman crusade, to kill New Jersey’s so-called “Death Taxes”.
“New Jersey is behind the times – the estate tax affects a lot of people in the state – not just the wealthy,” said Barbey.
New Jersey’s one of only a couple states — the other’s Maryland – that imposes two so-called “Death Taxes.” The Estate Tax levies the total value of your assets — including house, cash, and insurance — anything over a $675,000 threshold. Even the feds don’t tax estates until they hit $5.3 million.
“If somebody owns a house, they have a little 401K plan, some life insurance – a million dollars I’m sure covers a lot of individuals,” said Wolff & Samson Estate Attorney David Schlossberg
The Inheritance Tax takes a slice of assets given after somebody dies — from 11 percent to 16 percent — depending on how you’re related to the dearly departed. For example, death taxes on a Jersey estate worth $1 million can range from $33,000 for the Spouse and Children, to more than $100,000 ($107,250) for siblings, to a whopping $153,000 for a friend. Most states don’t have any death taxes and that’s pushing residents to make painful decisions.
“My clients and I’m sure a lot of other individuals – they’re thinking, “How do I avoid this?” You move,” said Schlossberg.
Maryland’s in the process of adjusting or repealing it’s death taxes, which would leave Jersey as the only state with two. Now that could really kill New Jersey’s chances for economic prosperity, according to tax analysts.
Gov. Christie tells this story about his friends.
“They moved to North Carolina. And I said, Oh, you can’t afford to live here anymore? And the wife said, No, Chris – we can’t afford to die here,” said Christie.
Several legislators support bills that would raise New Jersey’s Estate Tax threshold at least to the $5.3 Million federal level. Some propose dumping the inheritance tax. But lawmakers are loathe to ditch the $700 million in annual revenue both taxes pull in.
“You have to come up with replacement income, because the ability to cut is almost exhausted. The only place to look in my mind, you have to consider the Millionaire’s Tax,” said Asm. John Burzichelli.
But the Millionaire Tax is a non-starter with Gov. Christie. And as the stalemate continues, politicians fear, Jersey’s affluent and middle class will be dying to move out.