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Home / Washington Business - January 2006 / Points of View: The Fight Over Dead People's Money |
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Points of View: The Fight Over Dead People's Money |
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Written On: January 2006 |
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In this issue of Washington Business, the points of view deal with the estate tax; one of the oldest and most common forms of taxation. This most controversial way to tax someone’s property is called the "death tax" because it is levied on personal property when someone dies.
The estate or death tax came as a way to break up the family fortunes of 19th Century industrial tycoons like the Rockefellers, J. P. Morgan and Andrew Carnegie. Both the state and federal government established estate taxes and these have been controversial from the day they were levied.
President George W. Bush and Congress took the lead in phasing out the Federal Estate Tax in 2001 as a way to perpetuate family-owned businesses and farms. It began the process of phasing out the federal tax and, under the federal plan, the tax would be completely eliminated by 2011. However, there is a weird quirk in the law. It has a sunset provision which says that unless Congress and the President act again, the federal estate tax automatically reinstates itself at full value in 2012.
Former Washington Congresswoman Jennifer Dunn, R-Bellevue, led the effort to repeal the sunset provision. However, Dunn chose to retire from Congress in 2004. So, Washington’s champion is no longer walking the halls of Congress in our nation’s capitol.
In February 2005, the Washington State Supreme Court invalidated the state’s regressive estate tax. The court agreed that the state did not have jurisdiction to collect estate taxes. However, by April 2005, the Washington Legislature, over AWB’s opposition, passed a bill creating a stand-alone state estate tax which created the jurisdiction for the state to collect it.
Gov. Christine Gregoire supported the plan and signed the legislation re-establishing it. The new state estate tax applies to estates of $1.5 million or more this year (for deaths occurring after enactment of the tax) and estates of $2 million or more beginning in 2006.
As you will read in the two attached points of view, the differences over the state and federal estate taxes are deep and defined. And each side of this contentious issue has its share of heavyweights.
Leading the charge to repeal the state and federal taxes are family-owned business leaders like Seattle Times publisher Frank Blethen, GM Nameplate owner Don Root and Schweitzer Engineering Laboratories founder Edmund Schweitzer.
On the other side are Bill Gates, Sr., father of Microsoft’s founder, and Gov. Gregoire. In this issue of Washington Business, our viewpoints focus on a letter exchange between Schweitzer and Gov. Gregoire.
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