“The inheritance tax really comes into focus with small business planning. The inheritance tax means some difficult decisions must be made to ensure my business can outlive me.”
Letter to the Editor, Oskaloosa Herald
February 1, 2021
It’s no secret Iowa has struggled with tax competitiveness, ranking in the bottom half of states when it comes to overall state and federal tax burden. This is why reducing Iowa’s tax burden should be a top priority for legislators as they convene this session in Des Moines. In addition to the broad reform regularly discussed, there are targeted measures that can get us moving in the right direction.
For instance, Iowa is one of only six states to levy an inheritance tax. Iowans receiving property from a brother or sister, cousin, friend, or business partner are subjected to a tax starting at 5% that goes up to a top rate of 15% on estates with a total value of as little as $25,000.
The inheritance tax really comes into focus with small business planning. In my personal business planning, the inheritance tax means some difficult decisions must be made to ensure my business can outlive me—decisions that I would not necessarily choose to make in a different tax environment. I am certainly not alone, as according to Iowa’s Legislative Services Agency this amounts to the state taking nearly $100 million a year from Iowa taxpayers. This is no small amount.
While the financial toll of the pandemic on Iowa still isn’t fully known, we are still facing a steep road to recovery. Any measure that can keep more dollars in the hands of hardworking taxpayers and small businesses needs to be on the table now more than ever.