LD 420 creates two different exclusion amounts that apply to Maine businesses
As predicted, LD 420, An Act to Amend the Maine Exclusion Amount in the Estate Tax, sponsored by Rep. Benjamin Collings (D-Portland), has resurfaced in the Taxation committee, after failing to garner enough votes to pass in the House (70-75) and in the Senate (12-19) last session. On Thursday, March 5, the Taxation committee voted 5-5 on the ought-not-to-pass motion. Because it was a tie, all present committee members agreed to let the absent committee members vote. Those votes will be registered later, but as of press time, Sen. Matthew Pouliot (R-Kennebec), Rep. Bruce Bickford (R-Auburn), Rep. Stephen Stanley (D-Medway), Rep. Donald Marean (I-Hollis), and Rep. Amy Arata (R-New Gloucester) all voted ought-not-to-pass, and Rep. Ryan Tipping (D-Orono), Rep. Ann Matlack (D-St. George), Rep. Diane Denk (D-Kennebunk), Rep. Kristen Cloutier (D-Lewiston), and Rep. Maureen Terry (D-Gorham) all voted “ought-to-pass as amended.” The amended version would return the exclusion amount from $5.7 million to $2 million and would provide an additional exclusion amount of $3.8 million specifically for fishing, farming, aquaculture, and wood harvesting businesses.
The Maine State Chamber opposed LD 420 because it would have lowered the exclusion amount for estate tax purposes. The Maine State Chamber has been on record for increasing the estate tax exclusion amount or eliminating the estate tax altogether. The Maine State Chamber has argued that the estate tax hurts Maine businesses, particularly smaller businesses and farms, that work very hard to pass long assets to their children and grandchildren. Lowering the exclusion amount would take away that opportunity and instead slap them with a massive death tax. If beneficiaries couldn’t pay the taxes due up front, they may be forced to deplete any capital they have in the business or perhaps even need to sell it to pay the tax. Ultimately, it punishes and penalizes success.
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