Lawmakers have a singular opportunity to end double taxation in state gift and estate taxes—a particularly important issue to Connecticut’s many small and family owned businesses.
CBIA is supporting SB 367 because it would make Connecticut’s gift and estate tax law consistent with the federal Internal Revenue Code.
SB 367 is very important because many small and family-owned businesses use trusts in their succession planning.
State gift taxes are often paid when these trusts are established. Yet if a death occurs within a certain amount of time after the trust is established, the trust’s assets are brought back into the estate--and the Department of Revenue Services then taxes the estate without granting a credit for taxes already paid.
Thus the double taxation.
In addition to being unjust, the practice of double taxation causes many people to establish residences outside of the state, thereby reducing Connecticut’s revenue potential.
The practice also further deters many small and family-owned businesses from investing further in their companies. Small businesses usually have a great deal of their assets committed to the operation of the business, yet lack sufficient liquid assets to pay the estate tax.
Concerns over the tax, even when it isn’t applied twice, are already significant enough to stop many small businesses from increasing investments in their businesses and hiring more employees. The double taxation issue just makes matters worse.
CBIA urges the Finance Committee to approve this measure which will help make Connecticut more economically competitive.