Robert Yablon (Yale J.D. 2006; winner of 2004 Tannenwald Writing Competition) has published Defying Expectations: Assessing the Surprising Resilience of State Death Taxes, 59 Tax Law. 241 (2006). Here is the part of the abstract:
The prevailing view among observers was that the many states levying only a pick-up tax would have no choice but to let their death tax collections dry up as the credit was phased out. In order to continue generating revenue, these states would have to redesign their policies, and their citizens would incur real costs. Given the success of the federal repeal movement in cultivating anti-estate tax sentiment, it seemed unlikely in 2001 that state officials would go down that road. Moreover, there were significant questions about whether stand-alone state death taxes would be efficacious given the ease with which people could relocate to more tax-friendly states. Conventional wisdom was that the states would have to find another way to recoup their revenue losses.
Yet, much to the chagrin of repeal advocates, state death taxes have not withered on the vine. Since the passage of EGTRRA, more than a dozen states have acted to decouple their death taxes from the federal regime, at least temporarily. About a dozen other states continue to levy state death taxes as a result of legislative inaction. This Article investigates why the states have defied expectations. It contends that EGTRRA, with its rapid phaseout of the state death tax credit, contributed to revenue losses at a time when state fiscal conditions were already deteriorating due to unfavorable economic conditions. Of course, even the most dire financial circumstances alone cannot dictate any particular course of action. Thus, this Article argues further that whether a particular state ultimately moved to protect its estate tax revenue also depended in large part on its ideological leanings and political configuration.
In order to put recent events into context, Part II examines the origins of the death tax credit, the effect of the credit on state tax policy, and the decision by Congress to accelerate its repeal. Part III turns to post-EGTRRA developments, outlining the anticipated state response and comparing it to what has actually occurred. Part IV undertakes quantitative analysis to test possible relationships between states’ policy choices and their budgetary, socio-economic, and political characteristics. Recognizing that statistical methods cannot reveal the true contours of state policy choices, Part V uses the states of Illinois and Washington to present a more detailed sketch of how events unfolded as states responded to EGTRRA.
