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Indiana House votes to phase out inheritance tax

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The Indiana House on Tuesday approved a 10-year phase-out of the state's inheritance tax that now brings in about $160 million a year.

House members voted 80-17 in favor of the plan that would more than double the current inheritance tax exemption for children and grandchildren to $250,000 and reduce the tax rate each year until 2022.

Republican Rep. Eric Turner of Cicero, the bill's sponsor, said eliminating the tax would help families keep small businesses and farms. He said it the current system is unfair because it taxes assets that a person had accumulated from their taxed income.

"You've already paid taxes on this money," Turner said.

The phase-out period will help the state afford the revenue losses, estimated to be about $60 million the first year and then an additional $10 million each year until the tax is eliminated, Turner said. Inheritance taxes currently account for about 1 percent of state revenue.

Opponents of phasing out the tax argued is the wrong step to take when budget leaders previously have said the state can't afford the estimated $60 million annual cost to eliminate school textbook fees or allow less-expensive moves such as removing the state's 7 percent sales tax on college textbooks.

"Every year it's, 'Sorry, gee we just don't have the money, it'd really be nice to do that,'" said Rep. Matt Pierce, D-Bloomington.

The state now exempts inheritances of less than $100,000 to children and grandchildren and has a top rate of 10 percent for portions of estates topping $1.5 million. More distant family members and non-relatives face higher rates. Spouses pay no state inheritance taxes.

The new exemption level for close relatives under the House plan would be $250,000, with a $25,000 exemption for others. The plan starts phasing out the tax on estates for those who die after July 1.

Senate budget leaders largely support the House's inheritance tax elimination plan but agreement must be reached on a final version by the end of next week, when legislative leaders expect to adjourn this year's session.

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  • Inheritance Tax
    It seems that we could have gone "cold turkey" on the inheritance tax, adding an offset tax to alcohol, tobacco, and firearms.

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  1. John, unfortunately CTRWD wants to put the tank(s) right next to a nature preserve and at the southern entrance to Carmel off of Keystone. Not exactly the kind of message you want to send to residents and visitors (come see our tanks as you enter our city and we build stuff in nature preserves...

  2. 85 feet for an ambitious project? I could shoot ej*culate farther than that.

  3. I tried, can't take it anymore. Untill Katz is replaced I can't listen anymore.

  4. Perhaps, but they've had a very active program to reduce rainwater/sump pump inflows for a number of years. But you are correct that controlling these peak flows will require spending more money - surge tanks, lines or removing storm water inflow at the source.

  5. All sewage goes to the Carmel treatment plant on the White River at 96th St. Rainfall should not affect sewage flows, but somehow it does - and the increased rate is more than the plant can handle a few times each year. One big source is typically homeowners who have their sump pumps connect into the sanitary sewer line rather than to the storm sewer line or yard. So we (Carmel and Clay Twp) need someway to hold the excess flow for a few days until the plant can process this material. Carmel wants the surge tank located at the treatment plant but than means an expensive underground line has to be installed through residential areas while CTRWD wants the surge tank located further 'upstream' from the treatment plant which costs less. Either solution works from an environmental control perspective. The less expensive solution means some people would likely have an unsightly tank near them. Carmel wants the more expensive solution - surprise!

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