Supporters of a proposal to raise New York’s estate tax threshold above $1 million say it would help thousands of homeowners, farmers and small business owners — not just the super-wealthy.
Gov. Andrew Cuomo wants to raise New York’s exemption threshold on estate taxes from $1 million to the federal level of $5.25 million. He also would reduce the tax rate from 16 percent to 10 percent over four years.
Opponents have said Cuomo’s estate tax plan would amount to a giveaway to the rich.
But Empire Center for Public Policy President E.J. McMahon says Monday it’s not unusual for households to have assets of more than $1 million, given current home values. The Empire Center, a fiscally conservative think tank, estimates that about 3,600 estates annually would be spared the tax under the governor’s plan.
Jeff Williams, policy director for the New York Farm Bureau, said the estate tax has been a priority issue for the organization for well over a decade. He said many farms in the state are worth more than $1 million.
“Many farms reach a million dollars very, very easily in today’s economy,” Williams said. “More than 3,000 farms in New York would have an estate tax. We hope the governor’s proposal gets passed.”
Russ Kelly, owner of Glenvue Farms in Fultonville, said he has taken action to make sure that his family farm would be passed on to his two sons, without a heavy tax burden.
He said his assets are worth more than $1 million, and that he supports Cuomo’s proposal to raise the estate tax threshold to $5.25 million.
“We don’t want our next generation to have to buy the farm over again,” said Kelly, 61. “We have begun the process of trying to get the assets transferred to our sons, but it isn’t cheap.”
He said to ensure his assets including land, buildings and machinery are passed along to his children when he and his wife die, he has been working with a number of business and financial consultants.
“I am not overly concerned, but we have taken steps to make sure that if something were to happen that we would minimize any state taxes,” Kelly said.
The farm was passed down to Kelly from his father, who moved to the area from Connecticut 42 years ago. Kelly owns 600 acres of farmland and rents 200 more.
His herd totals 900 cows, including nearly 500 milkers.
The estate tax is also on the minds of small business owners in the state. Mike Durant, state director of the National Federation of Independent Business, said Cuomo’s plan would help businesses keep their doors open.
“So many small businesses are multigenerational,” he said. “Without reforming the estate tax, it becomes very difficult for the business owner to then pass the business on to their children and keep it sustained.”
Durant said about one-third of small businesses in the state are multigenerational. He said the estate tax has led to some businesses deciding to leave the state.
New York is one of 14 states in the country that has an estate tax. Cuomo is proposing a five-year phase-in to increase the threshold to $5.25 million as part of his 2014-15 state budget.
“I think the case for this, from the governor’s standpoint, is pretty strong,” McMahon said. “This is the purest play among the state tax cuts economically that he has proposed.”
This story includes reporting from the Associated Press.