Maintain and Improve State Inheritance Tax, Don't Eliminate It

Download Sharon Ward's Full Testimony Before House Finance Committee

Pennsylvania should maintain its inheritance tax while limiting any adjustments to those that meet key policy objectives that cannot be resolved in any other way, according to PBPC Director Sharon Ward, who testified before the Pennsylvania House Finance Committee today.

"State inheritance and other wealth transfer taxes are unpopular, but they play a valuable role in state tax policy," Ward testified. "They provide a significant source of income for state services and make the tax system more fair."

Ward noted that the inheritance tax provides an important, consistent source of revenue for Pennsylvania. It raises between $700 million and $800 million - the amount that Pennsylvania spends on long-term care for the elderly from the General Fund each year.

Ward made suggestions for improving the inheritance tax. For instance, Pennsylvania "could establish a tax credit for taxes paid on the first $25,000 of an estate," she said. "This could function like a $25,000 exemption which would most benefit the smallest value estates."

Ward also explained the good policy reasons for having an inheritance tax.

"Public services that are provided by state government aid in the accumulation of private wealth," Ward testified. "Roads and transit, police and courts, public schools and colleges, immunizations and health initiatives each play a role in the lives of individuals and contribute to their economic success. The inheritance tax provides a form of reinvestment in the state and in our communities. It allows us all to give something back."

Download Sharon Ward's Full Testimony Before House Finance Committee