Illinois to Add $45 Million to State Coffers With Estate Tax
Not waiting for the federal government to make a final decision on the fate of the federal estate tax, the Illinois legislature is preparing to add an estate tax on estates that exceed $1.5 million. The state expects to add approximately $45 million per year to its budget by enacting the estate tax.
Illinois Governor Rod Blagojevich contends that the estate tax will only affect 158 Illinois residents. That being the case, the average tax taken from each resident's estate would be between $275,000 and $300,000. Starting in 2006, the state estate tax would only apply to estates that exceed $2 million.
The governor has argued that the estate tax will help balance the Illinois budget without imposing a burden on the majority of state taxpayers. The tax under consideration in Illinois provides the same amount of tax revenue to the state from estate taxes as was the case before the federal phase-out began in 2001.
Currently, twelve other states have created legislation to combat the phase-out of the federal estate tax. The phase-out of the federal estate tax began in 2001 and will continue through 2009. In 2010 the federal estate tax is scheduled to be eliminated completely, but only for that one year. In 2011 the federal estate tax is scheduled to be reinstated. Legislation is currently pending before Congress that would eliminate the federal estate tax completely.