Washington - Fairness demands state's estate tax should be repealed

Yakima Herald-Republic

Any debate about an estate tax brings to mind a couple of observations by former U.S. Rep. Jennifer Dunn back in 1998, when she introduced legislation in Congress to phase out the federal inheritance tax:


"It's been said that only with our government are you given a certificate at birth, a license at marriage and a bill at death!"

And:

"The saying goes that death and taxes are the only certainties in life. I believe it is ridiculous that the government force the American people to deal with both on the same day."


So true -- then and now.

The federal tax so despised by the former congresswoman from Washington was finally targeted for elimination and will be phased out by 2010 -- unless Congress should decide through inaction to reinstate it in 2011. Let's hope that thought never enters its collective mind.

Now the debate is focused on a state estate tax approved by the state Legislature last year -- a tax that would be repealed if votes approve Initiative 920 on the Nov. 7 ballot.

We urge voters to do just that. And be careful when you vote because a "yes" vote actually means you want to say "no" to the state estate tax and repeal it.

If nothing else, I-920 should be defeated as a matter of fair play. Heirs of people who have paid taxes of one type or another all their working lives while building an estate shouldn't have to pay another tax on that effort at death. Little wonder it's dubbed a "death tax" by many.

That's particularly true when considering that among those taxes paid over the years by businesses is the state business and occupation tax, which is levied against gross receipts, not net profit. Not unexpectedly, small business owners are among the most vocal critics of the tax.

Beyond that, it's simply a mean-spirited, soak-the-rich tax that actually provides a piddling amount of money -- estimated at less than $100 million a year, or about one-half of 1 percent of the state budget. State projections show it will affect fewer than 300 estates a year -- for now.

Voters repealed a similar state tax in 1981, but in so doing approved a measure that allowed the state to keep a portion of the federal inheritance tax instead. But that money-sharing is no more because of the federal phase-out and now the state has opted for a stand-alone estate tax.

The tax is levied on estates of $2 million or more, at a graduated rate ranging from 10 percent to 19 percent. The value of property used primarily for farming can be deducted from the taxable estate. And there is a career allowance for married couples.

The new estate tax has strong pro-education support because the money it raises is earmarked for a special Education Legacy Trust Account. That money can be used only for such things as class size reductions and higher education financial aid.

We would argue those needs should be addressed as part of regular education funding, and not by an unfair dedicated tax.

The estate tax unfairly targets people for being successful. Linking it to special needs for education is a cynical ploy that diverts attention away from the fact that the Legislature is not meeting its responsibility to fund education through general tax revenues.

We're also concerned that if the state tax remains, and the federal inheritance tax remains gone, it will be a great temptation for state lawmakers to up the ante for the state estate to bring in more money.

If voters fail to repeal it next month, we predict increased efforts by the wealthy to find loopholes and an increase in the number businesses leaving the state to avoid paying upon death of an owner.

The negatives far outweigh any positive argument that could be made about a death tax. Approve the initiative and wipe this ill-advised law off the books.


* Members of the Yakima Herald-Republic editorial board are Michael Shepard, Sarah Jenkins and Bill Lee.