Oops. In their tirades against I-920, which would repeal the state's death tax, some in the local media seriously misreported the number of state residents who are subject to the tax. According to the state Department of Revenue, the number of estates that are projected to pay the tax each year rises from 210 in 2006 to 270 in 2010. Somehow, the P-I and The Stranger left out the "each year" when they reported these numbers, publishing the flagrantly implausible claim that only 200-250 families in the entire state have estates valued at $2 million or more. Clearly, there are many more families that have or will have estates of that value and would therefore be subject to the death tax. Yet the nonsensically low numbers that the papers reported conveniently support the misleading argument that only a handful of the wealthiest individuals are subject to the tax (and therefore it's fair game for the rest of us to take their money and give it to the government) --
The Seattle P-I editorial of June 12 calls the repeal
a tax cut to the state's wealthiest 210 familiesThe Stranger's Unpaid Intern (Sarah Mirk) writes in this June 22, 2006 blog post:
In Washington, 250 families are affected by the estate tax.The unpaid intern is worth every penny! Nevertheless, the nonsensical claim earned Mirk a link on the Horse's Math blog and a high-six from News Editor Josh Feit. The Stranger repeated its goof in a June 22 print article and in Feit's June 27 blog post . Although I haven't found an explicit correction, at least The Stranger gets the "each year" part right in its current issue.
While The Stranger's reportage might be improving, the P-I editorials are only getting worse. This April 2005 editorial noted that the estate tax
would only apply to about 250 people per yearDo the P-I editorialists read their own editorials?. Do they understand how the death tax actually works?. Do they even care?
And while it might be a narrowly correct to state that roughly 250 families are affected a year that is still disingenuous. With a growing and aging population and asset price inflation, the number of taxed estates should continue to increase over time. Furthermore, everybody with an estate of at least $2 million is at risk for the tax today, we just don't know yet which individuals will happen to die and pay the tax in any given year. Even more importantly, many, many more of us could be subject to this tax in the future. Even if you don't have sufficient assets to be a victim of the tax if you were to pass away today, you could well be subject in the future. Many ordinary people who work hard, live within their means and invest regularly will find themselves subject to the death tax some day.
N.B. The P-I editorial board also laments America's low savings rate. The savings rate is the result of a large number of factors. But one thing's for certain -- few people are likely to be more motivated to save more knowing that a larger percentage of their nest egg will only be confiscated by the government
Posted by Stefan Sharkansky at June 30, 2006 11:53 AM | Email ThisThe people paying the highest tax rate right now are making between $60,000 to $110,000 a year.
There's a better argument for reducing taxes on people that are living than people who are dead.
Posted by: Erik on June 30, 2006 12:33 PMSince you can't take it with ya and very few can leave it to their heirs, you should spend it all while ya got it!
If you don't spend it and enjoy it, this damn nanny state will figure out how to snatch it from you.
Posted by: sgmmac on June 30, 2006 12:34 PMHow do you figure that Eric? The estate was originally purchased from income and or gains that have ALREADY been taxed. The fact that the person who paid all of their taxes and had more to invest dies DOES NOT make taxing that estate AGAIN appropriate in any way, shape or form! the estate tax is derived from elitists and class envy individuals who just can't stand the idea of people making money. Since they lost the battle with the original earner, they can try again with the heir!
Death to the Death tax. I signed it. If I lived in King County I could probably sign it again a dozen times....but then I'd be stooping to the left's level. I will vote for it when it makes the ballot.....and I'll only vote once, even if I have to vote for it by mail (and hope that my ballot doesn't get "lost"!)
Posted by: DRW on June 30, 2006 12:41 PMBut the "soak the rich" crowd here won't vote for it. So I don't think it will pass.
Posted by: Palouse on June 30, 2006 01:11 PMLet us count the times and rates for taxation of wealth.......
-Earned income is taxed when earned-income tax,
-invested,taxed again on sale- capital gains tax,
-then taxed a third time at death-estate tax
Well, #1 is 35%, #2 is 15%, #3 is 45%-in 2010 will be 55% for the IRS, plus #3 for WA State
Boy that really adds up.......
And your morons think that is not enough?
Shall we go beyond punishing success direct to confiscation?
The estate tax has destroyed the ability to pass larger family busninesses to future generations, hence large publicly held retailers, etc like WalMart, Macy's, etc etc., to whom family businesses are sold in order to pay the estate tax.
Oh my God, the liberals created WalMart with the estate tax........
Liberals, you pack of economic idiots......the estate tax clearly should be abolished at both the federal and state level, or we all will be working at Walmart.
What part of all this do you not get?
Posted by: THS on June 30, 2006 01:17 PMMaybe, however, if they want to reduce taxes, they should all be reduced proportionally.
Having Paris Hilton have her tax rate reduced or eliminated isn't very inspiring.
Income taxes have a far better reason to be reduced than estate taxes.
Posted by: Erik on June 30, 2006 01:51 PM"There's a better argument for reducing taxes on people that are living than people who are dead."
The Stranger:
"would only apply to about 250 people per year."
Obviously Erik and the Stranger ALSO don't understand - 250 families are more than 250 people, and the taxes are on the LIVING, not the dead!! Those 250 families could be 500-1,000 PEOPLE affected each year - and maybe more.
Erik, if you die and your estate is worth over $2 million and you've passed it on to your three sons and the state swoops in and taxes your estate - who has been taxed? You, or your three sons??? Methinks it's still a tax on the living, and you advocate it because the dead aren't here to defend themselves.
But hey - Seattle Liberals want DEAD PEOPLE TO VOTE - so why wouldn't they STILL TAX THEM ALSO??
Posted by: Larry on June 30, 2006 01:53 PMOh, and by the way, the post by THS is also correct...
The estate tax is the clearest example of double-taxation that exists! The dead person already paid taxes on income and investments in order to build their fortune. Now you want to tax them again? The second or third time?
Shame on you.
Posted by: Larry on June 30, 2006 01:56 PM
Well, #1 is 35%, #2 is 15%, #3 is 45%-in 2010 will be 55% for the IRS, plus #3 for WA State
Boy that really adds up.......
After #1, the estate includes 65% of the earnings.
After #2, the estate includes 85% of the remaining 65%, or 55% of the original earnings.
After #3, the estate includes 55% of the remaining 55%, or 30% of the original earnings. (That will be 25% in 2010, according to THS.)
That works out to a 70% (or 75%) overall tax rate. Can anyone confirm this calculation?
Large estates would actually pass through paying almost no tax generation after generation.
Upon death, no tax is paid on capital gains (unlike sales during a life). This sum would then continue to increase during the next generation with no taxes being paid on the gains.
I don't why the largest pass through fortunes should be nearly tax free.
Someone self employed pays about 50 percent tax if they earn around $100,000.
Its a matter of priorities. Plus, small businesses should be encouraged.
You are basically saying that because most of the population do nothing to finance their priorities, the wealthy will, with no say in the matter, have their money taken to finance other priorities.
You are correct, though, that all assets take their value at the time of death. That includes assets that have lost value as well as ones that have gained in value. I would see no problem if that were repealed along with the death tax. Assets should transfer at their base value, then when sold taxed at the current tax rate.
Posted by: Fred on June 30, 2006 03:10 PMBingo, you got another one right (although I doubt you knew it). Small businesses get nailed! Grocery stores, farms, small manufacturers and the like. Too many small businesses are liquidated because of the estate tax. Why, because someone was a good business person, built their inventory, bought a building, etc. Then at the time of death, after taxes, there is very little left to support restructuring the business. The death tax makes me ill! Anyone who supports it is obviously a socialist.
Posted by: PaleAle on June 30, 2006 03:29 PMTherefore the government has no business looting big estates, other than the votes generated by the base impulses of 'Eric' and those others who operate on a framework of spite and jealousy instead of cheering successful community members.
Vote no for spite and jealousy.
Posted by: Hank Bradley on June 30, 2006 04:39 PMDon't talk about punishing success. This isn't preventing successful businessmen from making a living - it's hitting rich kids who stand to gain from thier parents.
Think of all the Blethen kids running around the Seattle Times and being appointed to positions well beyond their competence. Or take Larry's Markets, which went straight into bankruptcy once the original Larry gave the business to his sons.
Think I'm bleeding heart if you want, but I'd first encourage you to see the operations of your typical family owned business, observe the behavior of the heirs and then come back and tell me if you really think the tax is all that unfair.
Posted by: Jack on June 30, 2006 04:47 PMDemocrats are neither interested in repealing nor raising the floor.
Reason being, they want to tax the middle class more.
The capital gain argument is completely bogus- hang a sign on your back that says "thief"
Take that Queen Christine, and ponder it while you ride 300 paces to your office.
And you represent the little people, you arrogant and delusionary hag.
Posted by: THS on June 30, 2006 05:14 PMEstate taxes at the federal level have been as high as 55% above the "maximum allowed estate" before the tax hits, and then its 55% of what's left over.
One argument against the estate tax is that for business owners who have built up a business, the estate tax forces a sale of the business or a shut down at the time of death, which likely fails to maximize potential tax revenue to the state in the case the business is kept running and sold at a time of maximum potential profit.
A more appropriate position would be to treat the estate tax like any other capital gain - you pay tax when you sell what you inherited (potentially minus the cost basis).
If a business person bequeaths the family business to family members who then run the business, they'd pay no taxes at time of death. But if they chose to sell the business - or even part of it - they would pay tax on their gain (could even be different than the current capital gain tax rate to recognize that it is different than ordinary capital gains).
The value of this approach is multi-fold:
And that one way has 3 parts:
-term limits for US Senate and House, just the for the President. Then, no more career politicians who today use the tax system to both pass out favors and collect re-election contributions. The Constitution envisioned citizen legislators. If Congress were term limited and in session 1 mo/yr, people like you and me could and would run for Congress as we could do it and keep a real job. And we would ignore special interests looking for a deal in exhcange for filthy cash-William Jefferson LA-D: career politician, scumbag...
-total, transparent political contribution disclosure available for all to see and study. Then, stooges like Patty Murray would have to reveal that the vast bulk of her contributors are out of state interests and bent on getting something out of the dummy that she is in exchange for the bucks....
-after these two, there would be no incentive to pass out favors through the tax system. The tax system could then be cleaned up and simplified. Right off the IRS website, the top 1% of income earners pay 1/3 of all income taxes. In business, if 1% of your customers were 33% of your sales, you would be fired as an executive for risking the company's future on 1% of your customers. If liberals had any brains at all, they would insist on having a stable funding base so a recession would not so drastically impact Gov't revenues as it is now-1% are 1/3 of all revenues. Liberals, if they could think straight, would love a head tax-no dip in revenues when a recession comes along.
It all boils down to ego, and an inability to reason cleary-the liberal mental disease....
And, we have no one to blame but ourselves for electing and keeping absolute economic droolers in office like McDermott, Murray, Cantwell, Queen Christine......
Posted by: THS on June 30, 2006 05:39 PMI do not object to the estate tax in principle -- but I have grave doubts about how the current federal estate tax works in practice. And I suspect the state tax will have similar defects -- and will help generate lots of money for the Gates firm and others in the same business.
And I am amused when I see Warren Buffett -- who supports the estate tax -- give most of his money to a foundation so that his estate will pay little if any tax. And I am also amused to see the New York Times support the estate tax -- when the Sulzbergers have rigged their company so as to avoid paying it. (And to avoid giving control to ordinary stockholders, but that's another story.)
Posted by: Jim Miller on June 30, 2006 06:05 PMGates Foundation - amused.
Olin, Bradley, Smith-Richardson, Mellon-Scaife, Coors, etc. - positively delighted!!!
All these foundations are equally virtuous examples of "returning a fortune to society".
Posted by: Jimmy Blue on June 30, 2006 06:23 PMAnd then they graduate and go to work for the MSM.
And then you get to read the ridiculous ramblings of people like Joe Cornelly and Ryan Blethen and the guy at the PI with the Harry Potter glasses.
Posted by: Organization Man on June 30, 2006 06:44 PMAbsolutely. Untypically however there are many who take the higher road in life - like Ben Domenech.
Posted by: Jim West on June 30, 2006 07:00 PMAbsolutely. Untypically however there are many who take the higher road in life - like Ben Domenech.
Posted by: Jimmy Blue on June 30, 2006 07:01 PMI wonder if they include the trust fund kids in the Kennedy clan in that group? Or do they just conveniently forget that the richest Senators and Representatives are mostly Democrats?
Sorry about that...
Posted by: MES on June 30, 2006 09:22 PMUntrue, because the tax is geared upon the economic circumstances of the deceased, not the living.
Posted by: South County on June 30, 2006 10:04 PMGolly this liberal thing is really easy.
Amen! Warren Buffett was a big supporter of the Estate tax, and how much did he leave to the government......Nothing!
Do as I say not as I do, just like most the demoncraps in this state.
Get out of your cars, while they buy new tax paid cars every year, like Nickels and Sims, have tax paid drivers come every day to their homes and pick them up then deliver them home each day (two times the driving needed).
Get out of your cars is their "Mantra"!
Well I say "I will follow all you demoncraps out of your cars"
Until than Lead by example!
Untrue, because the tax is geared upon the economic circumstances of the deceased, not the living.
And I say that your posion is untrue. When one of the big arguments in favor of the death tax is to prevent supposedly undeserving offspringfrom getting a parent's widfall, then the tax IS upon the living. To say otherwise is disingenuous.
This really calls into question the idea of property rights. Is a person's property thiers or the government's? Our nation was founded on the principle of property belonging to the person, but year after year that principle is eroded. Eventually we will all simply be renters of the "government's" property and what we have in terms of money and material goods will simply be at the pleasure of the "governemnt". Of course, the government won't be "of the people" any more either.
I really think the liberal set has no idea how anti-American their views are as they work tirelessly to remake America into thier own vision. Their vision of America is not the vision of the founding fathers.
-Eyago
Posted by: Eyago on July 1, 2006 07:35 AMBy contrast:
Shrink the guvmint.
Drown it in a bathtub.
Increase military spending.
Wage pre-emptive wars.
As long as I don't have to pay for them.
Say what you want...mine is not a political argument, but an accounting truth. Whether a death tax is due has nothing to do with the financial circumstances of the recipients, but of the giver. The tax is triggered and assessed based upon the size and type of estate, which is the estate of the deceased.
If the tax is triggered based upon the decedent's circumstances, it is a tax on the decedent. There is no measure of the deservedness (or otherwise) of the recipients, and the tax is not levied based upon such a measure. The recipient could be a cat and the tax would apply.
Speaking of disingenuous...the wastrel heir is a cliche. And not all estates are equal. Warren Buffett, for example, holds no tangible assets; his assets are financial in nature. He's a shareholder. Berkshire Hathaway will change when he retires; his ownership has no affect on the workings of the company. Berkshire Hathaway will not be appreciably different when he gives his stock away.
A privately held company will be. Ownership and stewardship are linked. Many companies have to be sold or liquidated to satisfy estate taxes.
Also...many estates will not be subject to tax, because of estate planning schemes. Do you suppose, for example, that anyone named Kennedy has ever paid a penny in estate tax?
You would have a stronger argument for fairness if you advocated scrapping these tax avoidance schemes.
Argue if you want that the estate tax is a tax on heirs, but in fact and process it is a death tax.
Posted by: South County on July 1, 2006 10:35 AMHas she looked for any evidence of this, from family members who either had to sell their family home or business?
377,000 signatures when only 224,880 were needed. Now only one of her activist judges can wipe this off the books.
I will be voting to wipe the repressive tax off the state books.
Posted by: GS on July 1, 2006 11:49 AMWithout knowing which schemes you are referring to, I can only state that I would disagree in theory with tax avoidance schemes. However, the fact that there IS a tax on the estate, there is certainly reason people are DRAWN to avoidance schemes.
If the tax is triggered based upon the decedent's circumstances, it is a tax on the decedent. There is no measure of the deservedness (or otherwise) of the recipients, and the tax is not levied based upon such a measure. The recipient could be a cat and the tax would apply.
I still disagree. The triggering event is irrelevant in this case. The tax has no impact to a dead person, so they are not, in effect "taxed." It is a clever bit of prestidigitation, because the dead person is not impacted, and the assets are divided up before the heirs receive thier cut. In a sense, the assets belong to no one and one can say that it is not the heirs that get taxed.
The salient issue is WHY the tax exists in the first place. Is there any justification for the goverment to seize half the assets of an estate? If the governemnt needs the money, there are better ways to get it (And let's not get into how the goverment revenues have outstripped inflation and population growth combined over the last 40 years.) Many believe that the administration of this tax is paid for by the collecting of the tax, so its only real value is in creating jobs for lawyers and beaurocrats...Except for the added benefit of trying to prevent heirs from inheriting the family fortune. And if THAT is the reason, then it is not a tax on the deceased but on the heirs.
The worst part, as you pointed out in your Kennedy example is that the super rich don't pay it, so it is left as a device to dismantle the estates of the slightly above average. That is certainly a worthwhile goal. It helps the super rich to keep their spot as kings of the hill while knocking the rest of society down a few pegs every generation.
-Eyago
Posted by: Eyago on July 1, 2006 02:13 PMIn the end he so believed in the estate tax that he totaly evaded it.
And Good for him!
Posted by: GS on July 1, 2006 03:19 PMThe vast majority of inherited wealth is typically capital gains, which are ONLY TAXED UPON SALE. There is NO double taxation here.
All class issues aside, the key problem is this:
What will you replace it with? Like all right wing fanatics, you ignore the big picture.
Eliminating the estate tax eliminates a huge amount of state revenue. Since, unlike the Bush administration, state governments are thankfully not allowed to plunge taxpayers into debt, how will you resolve the resulting revenue gap?
Describe EXACTLY which programs you will cut (I believe all current estate tax revenues go to the education trust fund), or which taxes you will raise to make up the difference. Not so easy, is it? Are voters truly moronic enough to believe you can have gain, with no pain? That goverment services are free? Apparently so, given that the current administration has managed to fund the largest expansion of government spending in history, AND a war, without demanding any broad sacrifice of citizens, or corporate war profiteers (aka Big Oil).
Posted by: Proteus on July 6, 2006 03:38 PM