House lawmakers have approved a bill to eliminate Delaware’s estate tax on the same day they voted to raise the corporate franchise tax on businesses that incorporate in the First State.
Lawmakers voted 24-to-16 Thursday for the measure, which repeals the tax levied on a person’s property and other assets when he or she dies. If the bill is approved by the Senate and signed into law, the estate tax would no longer exist for people who die after Dec. 31 of this year.
Analysts expect the state to lose about $3.7 million in fiscal 2019 and $5 million the following year if the tax is repealed.
But chief bill sponsor Rep. Mike Ramone, a Newark Republican, said the tax actually costs the state money because it has prompted wealthy individuals to move out of state, resulting in a loss of personal income tax revenue they would otherwise have paid.
Also on Thursday, House lawmakers approved a bill increasing taxes on large corporations as part of an effort to find additional revenue to help balance a budget for the fiscal year starting July 1.
Under the legislation approved Thursday, many companies incorporated in Delaware would see their maximum corporate franchise tax payments increase from $180,000 to $200,000. The legislation also creates a second-tier tax of $250,000 annually for the largest corporations.
The bill is expected to generate an additional $116 million annually for the state’s general fund.Carney also has proposed raising personal income taxes and tobacco taxes to generate an additional $80 million in revenue.
Members of the legislature’s budget-writing committee are scheduled to begin drafting a spending plan for fiscal 2018 next week.