Illinois progressives aim for nation’s highest estate tax to give more to people with disabilities

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A group of Illinois’ progressive lawmakers is pushing to create new revenue for people with disabilities by doubling the state’s estate tax to the highest in the nation.

State Rep. Barbara Hernandez, D-Aurora, and others in the House Progressive Caucus could see their House Bill 3920 heard in the Revenue and Finance Committee as soon as Thursday.

If enacted, it would send monthly payments to people with disabilities worth “1/12 of the applicable annual federal poverty level for the individual's family size minus the amount of the individual's monthly federal SSI benefit.”

Those payments would extend to undocumented immigrants who have a disability and otherwise qualify and the extra benefits wouldn’t count against any other means tests for other benefits.

The state would pay for the program by adding an additional 5% on Illinois’ estate tax from 4.95% to 9.95%. That would result in a top marginal rate of 21% on value over $4 million.

“The top marginal estate tax rate under this proposal would become the highest in the country at 21%,” Tax Foundation analyst Katherine Loughead said.

Illinois is one of 12 states that tax the total value of an estate at the time of the owner’s death. Any estate value over $4 million would be subject to Illinois’ estate tax.

The tax has been the target of criticism from the business groups and the Illinois Farm Bureau because estates of small business owners including farmers can be rich in assets but poor in cash. Between the market value of land, buildings, livestock, and machinery, a farm operation of relatively modest means can quickly qualify for Illinois’ estate tax provision.

Illinois Attorney General Kwame Raoul, who is tasked with collecting estate taxes, brought in more than $315 million in 2018. The office didn’t release any collection data in 2020.

Loughead said most states with an estate tax have been slowly phasing them out after the Tax Cuts and Jobs Act of 2017 increased the federal threshold and eventually phases it out completely in 2025.

“Just a few decades ago, almost every state had either an estate tax or inheritance tax,” she said. “Now, most states have done away with those.”





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