Republican Senators Randy Feenstra and Jake Chapman voted a bill to repeal Iowa’s inheritance tax through subcommittee on Thursday. Democrat Sen. Herman Quirmbach did not support the repeal.
Quirmbach said someone who invested in stock, property or something else and dies while still owning that asset hasn’t paid any capital gains along the way.
“So talk of double taxation is wrong,” Quirmbach said.
According to Quirmbach, Neil Harl, a professor in agriculture at Iowa State, told him any effort to justify the repeal of the inheritance tax on the basis of agricultural impact on the family farm is “misplaced.”
“I think that inheritances of substance should be subject to some degree of taxation,” Quirmbach said. “In many cases the money passed along was never taxed and never subject to the income tax. It’s not a death tax. One-hundred percent of us die, as far as the federal estate tax, something like one percent of us actually pay that. When 99 percent avoid that, it’s hard to say it’s a death tax.
“People who get inheritances should be glad for what they get and share that. it needs to be contributed to meet the needs of the community.”
Sen. Chapman was eager to disagree.
“I couldn’t disagree more,” he said.
Chapman asked Brad Hudson of the Iowa State Education Association if it is Hudson’s position that this tax belongs to the schools, referring back to Hudson’s comments earlier during the subcommittee.
Hudson confirmed his words.
“This is a plunder tax,” Chapman said. “It is a death tax. It is one of the most abhorrent taxes we have.”
Chapman said the state is robbing nearly $90 million from the grave every year.
“This is one of the worst tax policies we could ever have,” Chapman said. “I can’t think of a tax that has done more to devastate the family farm here in America than the death tax.”
Sen. Feenstra noted the tax disincentivizes economic growth in the state, especially within the farming and business communities.
“If you have a farm operation and want to give it to your brother or sister, if that person doesn’t have the assets to pay, it can really be significant when you have a large farm going from one person to another,” Feenstra said. “I just think it’s extremely important that we get rid of this tax.”
Victoria Sinclair of Iowans For Tax Relief spoke in support of the bill.
“Most states do not have an inheritance tax, but unfortunately, Iowa does,” she said. “In an already difficult economic environment for our agricultural community, the state may be driving the final nail into the heart of the family farm via the inheritance tax.”
In addition to Iowans For Tax Relief, other groups that registered for the bill include the National Federation of Independent Business, Americans For Prosperity, Iowa Farm Bureau Federation and DAV-Iowa.