This op-ed by the American College of Trust and Estate Counsel sums up why:
For reasons of tax policy, we oppose the New Hampshire estate tax proposed in Senate Bill 450.
If adopted, the proposed statute would impose an 8 percent tax on all estates over $2 million passing to anyone other than a spouse. But the adoption of an estate tax will not provide a net benefit to the state.
The proposed tax will affect only the very wealthy who live here or who have property here. These individuals usually can choose where they live, and they can decide whether they want to maintain expensive properties in New Hampshire.
Many of the affluent clients we advise have homes in Florida or other warm-weather states (including California, Arizona and South Carolina) that have no estate tax. Our clients with homes in Florida often ask whether they should be New Hampshire residents or Florida residents. When the estate tax is a neutral issue (meaning neither state has such a tax), New Hampshire and Florida are more or less equal. Not surprisingly, our clients with New Hampshire connections tend to remain New Hampshire residents or to retain residential property here because they are not concerned that it will be exposed to taxation when they die.
The other New England states all have estate taxes. Many people choose New Hampshireas their state of residence rather than one of our neighboring states (notablyMassachusetts) because of the absence of an estate tax. Often, these are retirees who would not otherwise be here. Accordingly, we are concerned that if we adopt the proposed estate tax, New Hampshire will lose its favorable position as a place that does not penalize its wealthy property owners when they die. This could cause people who can conveniently do so to move their state of residence to Florida or elsewhere – or cause others not to move to New Hampshire in the first place.
Here are folks who are in the trenches telling us that “taxes matter” in relocation decisions.