Washington voters should end state's destructive death tax

The Seattle Times
By Senate Majority Leader Bill Frist

ALTHOUGH the United States Senate fell just a few votes short of passing legislation earlier this month that would have significantly cut America's federal death tax, Washington state voters will have an important opportunity to eliminate their own death tax in November. I urge them to take it, vote in favor of Initiative 920, and send the unusually cruel tax to its well-deserved resting place.

Sens. Patty Murray and Maria Cantwell voted against killing the federal death tax. In my judgment, both made the wrong choice for Washington state and the country as a whole. Quite simply, both the United States federal government and all state governments need to do away with all death taxes. They're unnecessary, destructive and cruel.

Neither the federal government nor any state government relies on death taxes for more than a tiny portion of total revenue. Because they're relatively easy but quite costly to avoid paying, many economists believe that the financial machinations necessary to avoid death taxes actually deprive the government of more tax revenues than the taxes themselves collect. And, while death tax proponents claim otherwise, there's no solid evidence that such taxes encourage charitable giving.

Because death taxes have so many obviously unfair attributes, overwhelming majorities of Americans oppose them. When Washington state residents last voted on the issue in 1981, nearly 67 percent opposed the tax.

And death taxes are just creepy, too. The process of assessing death taxes on grieving families can prove quite invasive: Under the Washington state death-tax regime that voters repealed in 1981, state-paid appraisers would even determine the value of wedding rings in order to calculate the amount of tax due.

Now that the Washington state Legislature has decided to bring back the death tax, Washington state voters should go back to the polls and eliminate it again. Death taxes imposed by a state prove particularly destructive because they discourage people with successful family businesses from setting up operations in a given state and encourage the well-off to move away.

The death tax also destroys family businesses. In capital- and labor-intensive industries like farming, publishing and ranching, a business with an impressive-sounding value on paper often provides only limited cash flow. Particularly when a loved one dies unexpectedly, heirs face the wrenching decision of selling a valued family business or going deeply into debt in order to pay the enormous tax bill.

While the extremely wealthy can almost always shelter their assets using trusts, corporations and foreign partnerships, smaller business owners generally can't avail themselves of these options. As a result, the real brunt of death taxes falls on the hard-working everyday people who have managed to acquire significant but not always cash assets.

Death taxes, in short, hurt just about everyone. Sens. Cantwell and Murray, unfortunately, failed to do the right thing earlier this month when we voted on permanent reform of the federal death tax. In November, Washington state voters will have a golden opportunity to vote down the state death tax and send a clear message to the rest of the country.

U.S. Sen. Bill Frist, R-Tenn., is the Senate majority leader