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House and Senate Split on Maine Estate Tax Repeal Bill

On a party line vote in the House, Gov. Paul LePage’s proposal to repeal Maine’s estate tax failed on a 77 to 65 vote. The Senate has voted, also on a party-line vote, 18 to 13 to pass the measure.

That means the chances for the bill's success this session are dimming.

Gov. LePage has attacked the estate tax for years, calling it the "death tax" and arguing it stifles economic growth by encouraging wealthy citizens to take their assets and move to other states that do not impose it. House Democrats rejected that argument, saying the measure amounts to a tax giveaway for the wealthiest of Maine families.

Lewiston Sen. Nate Libby, a Democrat, says there are many myths about the estate tax, including the claim it is double taxation. He says without a tax on a person's estate, considerable wealth accumulated through stock, properties and other assets would never be taxed.

"So if the person holds on to the estate until their death, that tax is never assessed because the gain is never realized," Libby says. "And without the estate tax, the heir to the estate would inherit the estate of five-and-a-half million (dollars) or more and pay no tax at all."

Libby was referring to the change in the tax on estates the Legislature adopted last year. It brought Maine into alignment with the federal estate tax which exempts the first $5.5 million of an estate from taxation. But Sen. Garret Mason, the Republican majority leader from Lisbon Falls, says that change was only a step toward the goal of abolishing the tax. He says the issue points out a fundamental difference between the political parties.

"The big question here is should the government be able to sweep in after somebody dies and take money from them," Mason says. "I would submit that they don't. I think this is yet another big difference between our political philosophies."

Sen. Eric Brakey, a Republican from Auburn, says he wants to repeal the estate tax for economic reasons, but he says lawmakers should also consider the emotional aspects of the tax - for example, the arrival of a tax agent on the family doorstep after that same family has suffered a personal loss.

"I am just going to ask this body to think about what we subject grieving families to when the government swoops in as a vulture and picks at what is left over," Brakey says. "Let's not subject anyone at least to that."

Opponents point out Maine is one of only 15 states that have an estate tax, but supporters of the tax point out that only about 60 families a year have estates large enough to pay any tax at all - and that's out of more than 13,000 people who are expected to die in Maine each year.

Senate Democratic Leader Justin Alfond from Portland says it will cost around $15 million to pay for the repeal of the estate tax, a cost that is not paid for in the legislation.

The governor says if lawmakers approve the repeal, the cost will be part of future budgets. The bill now goes back to the House where Democrats says they will again defeat the bill. One thing for certain is both parties will be paying close attention to this vote during upcoming legislative races this fall.

Journalist Mal Leary spearheads Maine Public's news coverage of politics and government and is based at the State House.