Fate of estate tax weighs on state budgetWisconsin's state budget deficit could get even bigger depending on what Congress decides to do with the estate tax this year.
By: Shawn Johnson, Wisconsin Public Radio , Superior Telegram
Wisconsin's state budget deficit could get even bigger depending on what Congress decides to do with the estate tax this year.
Wisconsin's estate tax has historically been linked in one way or another to the federal estate tax. The connection used to generate hundreds of millions of dollars in state tax revenue that gradually went away as the federal estate tax was phased out over the past decade.
But that phase out -- like other Bush tax cuts -- had a sunset. What that means is that if Congress does nothing, the federal estate tax will return to what it was in 2001 and the state will start collecting tax money again, too.
But Jon Peacock with the Wisconsin Council on Children and Families says the trouble is that nobody is actually talking about that in Congress.
"What we're saying is that what isn't realistic is to assume that the tax will return."
Peacock and other budget observers are allowed to speculate on this stuff. The non-partisan Legislative Fiscal Bureau is not. And so when it projects a $2.5-billion shortfall in the state budget, it's going by the law that's on the books right now. That law says the estate tax will return in full force. If it's not, the Fiscal Bureau says the state's budget shortfall could actually grow by as much as $219-million, making an already difficult budget situation even worse.