House puts first nail in coffin for NC 'death tax'

North Carolina's estate tax would end under a proposal the House tentatively approved Tuesday.

House Bill 101 would immediately repeal the tax often derided by critics as "the death tax" because it taxes inheritances passed from wealthy individuals to their surviving family members.

Rep. Nelson Dollar, R-Wake, said farmers are most often affected, forcing children to break up farms or sell off some of the land to pay the tax bill.

"This bill helps keep family farms in the family," Dollar said.

Rep. Paul Luebke, D-Durham, called the measure a break for the super-rich that deprives the state of money needed for such programs as pre-kindergarten access for low-income children. Only 23 North Carolina families paid an estate tax in 2012, totaling more than $50 million, he said.

Luebke said the bill should be handled as part of the overall tax reform effort or within the state budget.

"We should be so lucky that the average middle-class family can hand down $5 million to their children," House Minority Leader Larry Hall said.

Hall, D-Durham, questioned how the state doesn't have enough money for teaching assistants or Medicaid patients but somehow can give millions to wealthy families.

"Where are we going to pay for this? Who really benefits?" he asked.

House Majority Leader Edgar Starnes replied that people who saved and accumulated wealth throughout their lives shouldn't be punished for that when they die.

"They worked hard for their families, not the state of North Carolina," said Starnes, R-Caldwell.

The bill passed its second reading 83-36. A final House vote could come Wednesday, after which it would head to the Senate.