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Show Death Taxes Hurt Families With Modest nmmpc Although federal and state death taxes orignially were levied as a tax against the wealthy, they have become a burdensome and traumatic experience to the familv of modest means. In some cases, the tax has forced families to sell the familv business, the farm, or the familv homestead in order to pay the estate tax. Ihe.se were some of the observations presented by Utah Foundation, the private tax research organization, in their latest analysis of federal and state death taxes. According to the Foundation, Founda-tion, when the present S60.000 Federal estate tax exemption w as first established in 1942, it excluded all but a handful of very large estates from the tax. Over the past 34 years, however, inflation along with a rising standard of living have combined to greatly increase the dollar value of most assets, exposing millions of ordinary families to the steeply graduated gradu-ated estate tax. The market value of the family residence alone has put millions of people within the range of the estate tax. Particularly vulnerable to the estate tax ari those who own a small business or farm. The report notes that many w age earners who own a home and have accumulated savings and other assets over a lifetime or work are also being affected by the tax. Foundation analysts point out that there is growing recognition of the problem, and a number of proposals have been made in recent months to reform the estate tax. More than 200 bills to accomplish this purpose have been introduced in Congress, and the matter now is under consideration by the House Ways and Meam Committee. While Congress is considering consider-ing reform of the federal estate tax, a number of states have taken steps to reduce the burden of their death tax laws. Thus far in 1976, at least ten states (Delaware, Idaho, Indiana, Indi-ana, Kentucky, Minnesota, Nebraska, South Dakota. Vermont. Ver-mont. West Virginia, and Wisconsin) have approved reductions in their inheritance taxes. Earlier this year, the Utah Legislature passed a measure w hich would have reduced the state's inheritance tax. Although Al-though the bill was overwhelmingly over-whelmingly approved by both houses of the Legislature (73 to 1 in the House and 23 to 5 in the Senate), it was vetoed by the Governor for fiscal reasons after the session had adjourned. ad-journed. According to the Foundation report, the vetoed legislation would have replaced the existing Utah estate tax with a death tax equal to the maximum credit allowed for federal estate tax purposes. Federal tax laws provide that a credit against the federal estate tax due is allowed for all or a portion of the inheritance tax paid under state laws. The maximum credit allowed is equal to 80 of the basic federal estate tax in effect in 1926. If the proposed 1976 revision had been allowed to become law, the change would have reduced the combined Federal and state death tax on an estate in Utah to that now imposed by the . Federal Government alone. In vetoing the 1976 Inheritance Inheri-tance Tax Reform bill, the Governor emphasized, "I am not vetoing this bill because of the concept. I assured the principal sponsor of the bill that I approved of the approach, and that I believed the enactment of the bill might eventually actually increase the Utah tax receipts.... The veto is based solely upon the revenue effects of the bill as applied to the 1976-77 fiscal year." Since February, when the veto was made, state revenue collections in Utah have improved markedly. Actual general fund and uniform school fund revenues for the 1975-76 fiscal year are $11 million greater than the estimates used by the 1976 ' WW Legislature and about SI4 million more than the estimates esti-mates that were used bv the Governor at the time of the veto. The Governor, in vetoing the bill, maintained that the proposed law would have reduced general fund revenues reve-nues by $2 to2'2 million in the 1976-77 fiscal year. Proponents Propo-nents of the legislation, on the other hand, contended that the revision would have had a minimal effect, on 1976-77 revenues because it usually takes longer than twelve months to settle the taxes on an estate. |