State Rep Pushes to Modify Tax Code, Eliminate Discriminatory Inheritance Tax

State Representative Babette Josephs wants to eliminate a 15% inheritance tax for domestic partners, LGBTQ and straight, and is urging her colleagues to take action on legislation she introduced in 2011.  Erie Gay News has the story.

Josephs’ legislation (H.B. 1828) would define a domestic partnership as a relationship not defined by marriage or a civil union, but one where the two people agree to mutual interdependence and take responsibility for the maintenance and support of the other.

In order to prove this relationship for an inheritance tax exemption, the surviving domestic partner would have to provide a signed partnership affidavit and any two documents proving their:

  • joint liability of a mortgage, lease or loan;
  • primary beneficiary on the other’s life insurance policy or retirement plan;
  • primary beneficiary on the deceased’s will;
  • durable power of attorney for health care or financial management;
  • joint ownership or lease of a motor vehicle;
  • joint checking account, investments or credit account;
  • joint renter’s or homeowner’s insurance policy;
  • coverage on a health insurance policy;
  • joint responsibility for child care, such as guardianship or school documents; or
  • relationship or cohabitation contract.

Josephs said that at a 15 percent rate, the surviving partner’s inheritance tax bill could be in the tens of thousands of dollars. Currently, only spouses and parents of children under 21 are exempt from paying inheritance taxes on property bequeathed them.

In a 2010 report issued by The Center for American Progress and SAGE (Services & Advocacy for LGBT Elders), Pennsylvania ranked in the Top Ten Worst States for these punitive taxes. It is an unjust tax – imagine losing your beloved and then facing losing your home if you don’t have thousands for the privilege of inheriting it?

An inheritance tax is different than an estate tax – estate taxes only kick in when the property is worth A LOT of money. This inheritance tax applies to Jim and John, living in their shared house for 30 years. So much is up in the air — will Jim be able to access John’s pension? What about health insurance? And how was the house deeded? Its complicated enough without the state penalizing us because we can’t legalize our relationships.

I think this is a smart move and you’ll note that Josephs is focused on all domestic partners – even those who could marry. She’s validating a commitment than includes financial commitments which together contributed to the “worth” of the deceased partner. And it is a practical way to eliminate an injustice.

These are the small steps we can promote in PA to address inequality.



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