Last year, New Jersey’s political leaders delivered a huge gift to the heirs of the state’s wealthiest families – and a blow to everyone else – by eliminating the estate tax. This change will give a few thousand wealthy heirs a huge tax break, while draining the state of over $500 million a year in lost revenue – dollars vitally needed to support investments with widespread benefits, like infrastructure and higher education.

New Jersey does maintain a separate tax on inherited wealth – the transfer inheritance tax – but this tax is paid by heirs coming into much less money (as little as $500, compared to $675,000, the threshold at which the estate tax kicked in), making it far more regressive than the estate tax was.

Policymakers can restore fair and adequate taxation of inherited wealth by either restoring the estate tax, reforming the transfer inheritance tax or a mix of the two.

If they choose the former, policymakers could bring the estate tax back with a higher threshold than before. At a $1 million threshold, the tax would still raise a substantial amount of revenue while affecting even fewer – and even wealthier – New Jerseyans. If lawmakers choose the latter, the broad strokes of reform would be to expand the inheritance tax to affect direct heirs (such as children and grandchildren) while raising the threshold at which this tax kicks in to protect lower- and middle-income heirs.

To learn more click here.