The marine industry and its many partners are in Washington, D.C., this week for the American Boating Congress. They’re telling lawmakers about the the importance of the nation’s recreational boating industry and its overall $121 billion annual economic impact, 35,000 small businesses and the 650,000 jobs it impacts.
There are many issues on the agenda, but two that I hope are specifically brought to the lawmakers’ attention include the war against algae and the need to kill the estate tax in this country.
There is increasing focus on the algae blooms that are now occurring in many of America’s waterways. Look, a brownish-green film of algae, warnings not to swim in the water, dead zones where fish can’t survive and an obnoxious stink aren’t going to help boat sales.
Sadly, Lake Erie has become the icon for a problem that is serious in many states. Kudos to Ohio Gov. John Kasich and his recent call for neighboring states and Canada to help battle the algae in Lake Erie. While Ohio’s General Assembly has passed funding measures to aggressively attack the problem, it really highlights the need for much wider engagement by all impacted states. Moreover, it raises the obvious need for congressional representatives from all the impacted states to be pushing for help from the federal level.
Kasich has reportedly set up meetings with officials from Indiana, Michigan and Ontario. His objective is to work out mutual overall goals to reduce the algae. While much of Lake Erie’s pollution comes from Ohio’s northwest farm belt, there’s no question that farm fields and wastewater plants in other states are also dumping pollutants into the Great Lakes waterway system.
Estate tax kills growth
The U.S. has an intolerable top marginal rate on estates by worldwide standards, according to the Organization for Economic Cooperation and Development (OECD). An estate, which most often includes a small business, passed to a lineal heir is currently taxed at a rate of 40 cents on the dollar. Only Japan, South Korea and France are higher among the 34 OECD nations. Moreover, 15 OECD countries have zero estate tax and the simple average among those that do is just 4 percent.
In addition, many states pack on an estate and inheritance tax of their own. Currently, 15 states and the District of Columbia have an estate tax and six states have an inheritance tax. If you’re unfortunate enough to live in Maryland or New Jersey, there are both. Notably, the state with the highest estate tax rate is Washington at 20 percent.
While Congress seems unable to deal the needed death blow to the estate tax, some states, recognizing that such a tax slows economic growth, have taken to repeal-and-reform actions, according to Scott Drenkard and Richard Borean of the Tax Foundation in their report "Does Your State Have an Estate Tax?"
For example, Indiana sped up the repeal of its inheritance tax, retroactively to Jan. 1, 2013. Meanwhile, Tennessee will completely phase out its estate tax by 2016.
In addition, Drenkard and Borean cite Maryland and New York are phasing in higher estate tax exemptions to match the federal exemption of $5.9 million by next year. And, Minnesota is slowly but steadily doubling its exemption from $1 million to $2 million over five years, while the District of Columbia is focused on having higher exemptions as new revenues become available.
All well and good, you might say. But the worst remain on the federal level. It’s a fact that estate and inheritance taxes also have large compliance costs. They’ve been shown to suppress entrepreneurship. They’re among the most harmful taxes to economic growth, according to Drenkard and Borean.
The Marine Retailers Association of the Americas has made repeal of the death tax a high-priority objective. But, as you read this blog, all segments of the marine industry should be up on Capitol Hill calling for death to the death tax and its inherent unfairness to the nation’s boat dealers and builders, small businesses all.