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State Senate approves estate tax on wealthy

07:26 AM PDT on Wednesday, April 20, 2005


Associated Press



OLYMPIA, Wash. — Majority Democrats’ tax package has begun moving through the Washington Senate , with a narrow decision to restore part of the estate tax on the wealthy.

The tax would apply to estates of $1.5 million or more this year and those of $2 million or more beginning next year, about 250 estates, and would raise an estimated $135 million over the next two years.

The measure, the first big revenue bill to pass either chamber this year, cleared the Senate 25 to 21, the bare minimum of yes votes required for approval. Conservative Democrat Tim Sheldon of Potlatch joined Republicans in opposition. Three GOP senators were absent.

Next in line are tax increases on cigarettes, hard liquor and cardrooms, plus a new tax on extended consumer warranties. Combined with other revenue measures, the package would raise roughly $500 million.

The Democrats are putting the finishing touches on a $26 billion, two-year state budget. They began their process with a $1.6 billion spending gap.

The estate tax now heads to the House for swift approval. Gov. Christine O. Gregoire proposed the measure and is expected to sign it into law.

The tax is a narrower version of one that the state Supreme Court struck down this year, leaving a budget hole of more than $500 million in lost revenue and rebates of past estate tax payments.

Majority Democrats said estate tax revenue will be earmarked for an education trust fund that helps finance Initiative 728 to reduce public school class sizes and for moves to boost college enrollment.

The change could cause wealthy elderly residents to flee to other states, and school improvements could be handled within existing revenue, said Sen. Joseph Zarelli, R-Ridgefield, the chief GOP budget negotiator.

The measure exempts family farms. Republicans tried without success to add exemptions for shellfish and aquaculture operations, small businesses and the deceased person’s family home.

Democrats also turned back efforts to rename it the “death tax” and to put it on the fall ballot.

Sen. Luke Esser, R-Bellevue, said “death tax” amounted to “truth in advertising” and accused Democrats of trying to disguise big spending by tying an unpopular tax to a popular education initiative.

Sen. Don Benton, R-Vancouver, said Democrats showed they wanted to tax anything that moves, living or dead.

“The death tax is a dinosaur” and almost all other western states have ended their inheritance taxes, said Sen. Steve Johnson, R-Kent. The measure will be back on the ballot this fall or next, and voters will soundly defeat it, leaving another budget hole, he predicted.

“This is a big mistake,” he said.

Senate budget Chairwoman Margarita Prentice, D-Renton, said the new Education Legacy Trust Fund will use a tax source that has existed since 1901.

“We can’t cut and gut our way out of town” without a sensible revenue package, she said.

Senate Majority Leader Lisa Brown, D-Spokane, said Republicans retained the tax when they were in the majority and failed to finance I-728. The estate tax is “the one progressive piece of our tax system,” hitting only the wealthiest estates, contributing to the education system that helped many to accumulate wealth, she said.

The plan keeps faith with voters’ demand for lower class sizes and other school improvements, said Sen. Mark Doumit, D-Cathlamet. “We’re answering their call,” he said.



What a crock....