4-6-15 – Vermont Estate Tax Is Bad Policy

This first appeared as a letter to the editor in the Brattleboro Reformer
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Congratulations on the excellent story “Frugal benefactor leaves millions to Brattleboro Memorial Hospital and Brooks Memorial Library” (Feb. 5), which was subsequently picked up by the Wall Street Journal (“The Frugal Man Who Left an $8 Million Estate,” WSJ Weekend Investor, March 21″).
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The benefactor, Mr. Ronald Read, was an astute investor, and he and his advisors were also astute to ensure that his financial legacy would go to the charities of his choice, rather than being subjected to the Vermont estate tax. Mr. Read’s gifts reduced his estate to the point where it avoided Vermont’s exceptionally aggressive and regressive estate tax.
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Vermont’s estate tax is aggressive in that it has an exceptionally low exemption amount ($2.75 million). And it is regressive in that if one exceeds the exemption by even one dollar the entire estate is subjected to the tax (almost all other states with an estate tax only tax the portion above the exemption). As a non-resident landowner in Landgrove, I know this firsthand.
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Vermont’s estate tax each year surprises many successful and frugal investors like Mr. Read who wish to bequeath the fruits of their career to charity or to their heirs rather than subject it to taxation. It is a reason many successful people leave Vermont in their later years … and choose states like New Hampshire for their retirement.
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Successful and frugal Americans can greatly increase the value of their financial legacy by being proactive about where they choose to live the last years of their lives. It would be a simple matter for Vermont legislators to pass modest reforms of the estate tax to improve Vermont’s appeal as a great place to live the later years of ones’ life.
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– Paul Slobodian

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