JEFFERSON CITY — The president's proposed federal estate tax could bring millions of dollars in revenue back to Missouri, said State Budget Director Linda Luebbering.
Missouri received an average of $160 million a year from the federal estate tax when it was fully phased in, said Luebbering — money the state lost when the estate tax was fully repealed in 2010.
"If it came back and the federal government decided to share in that revenue with the state, it would actually be a positive for us," Luebbering said. "We're not counting on it, but if it were to happen, it would increase revenue for us."
The estate tax, which affects property transferred after a person's death, is currently scheduled to take effect again on Jan. 1, at a rate of 55 percent for estates worth more than $1 million.
President Barack Obama proposed a lower estate tax as part of the bipartisan compromise he detailed Monday. If passed, the federal government would impose a 35 percent tax on estates worth more than $5 million for the next two years — 20 percentage points and $4 million lower than the current plan. That means the government collects fewer tax dollars on each eligible property.
"The Republicans have asked for more generous treatment on the estate tax than I think is wise or warranted," Obama said in a press conference. "But we have insisted that will be temporary."
The lower estate tax plan was originally proposed by Sens. Blanche Lincoln, D-Ark., and Jon Kyl, R-Ariz. If not passed by the legislature, the estate tax will default to the scheduled 55 percent tax with a $1 million exemption.
In either case, this could mean more money for Missourians as long as the federal government is willing to share, said Luebbering.
The reduced estate tax is part of a greater compromise to appease both Democrats and Republicans, namely by extending unemployment benefits and Bush-era tax cuts for 13 months and two years, respectively. The other tax changes in the compromise would have no net impact on Missouri's revenue, Luebbering said.
"Whether it's extended or not, the impact for all those other pieces basically, the positives and negatives, all come to roughly zero," she said.