Okay, let me see now… an estate tax has been on Washington’s books since 1901, but just two months ago, the State Supreme Court tossed it due to the phasing out of the federal estate tax to which ours was linked by a 1981 initiative. The Legislature is now prepared to reinstate the estate tax, that has been off the books for only two months, while more than doubling the exemption to $2 million. And according to opponents… this is going to drive businesses out of state?
“I would support a higher sales tax, even an income tax in this state, rather than having a death tax installed,” said Don Root, who wants his sons to carry on his Seattle-based manufacturing and design company after he dies.
Reinstating an estate tax at the same time the federal government is poised to abolish it would cause successful Washington businesses to leave the state, taking a lot of good jobs with them, said Root, whose company employs roughly 450 people in Washington.
I appreciate Don Root’s endorsement of a state income tax, and I urge him to evangelize the rest of the business community. But somebody please explain to me how his logic on the negative impact of an estate tax is not a total load of crap?
Washington heirs have been paying an estate tax for 104 years — and on much smaller estates than proposed in the new budget — but now suddenly, because the tax lapsed for two months, a new-found class consciousness is going to drive the wealthy out of state? Was Root planning to move his business out of state before the February ruling? If not, why, and if so, has anything really changed? Is anybody actually suggesting that our estate tax has been driving jobs out of state since 1901?
This is not a new tax. It is a tax that we have been levying for over a century, and as William Gates Sr. points out, it is an extremely fair tax.
“The question is, why are people wealthy?” Gates said at a news conference last week. “They worked hard, they’re smart, and they are American … (with) a police force that works, a court system that works, a market system that makes it possible to dispose of what you own. Economists tell us that having a stable market adds 30 percent to the value of everything you own.”
I’m not going to argue that an estate tax will never force heirs to sell off a family business… perhaps it occasionally does. But when our highly regressive tax structure is so cruelly unfair to middle- and lower-income households, I find it incredible to think that we should shift even more tax burden onto working families because a handful of multi-millionaires think an estate tax is unfair.
I’m not sure what’s more offensive: the selfish efforts to secure yet another tax break for the wealthy, or the bogus and insulting economic threats with which they are trying to sell it.
UPDATE:
The Seattle P-I editorializes in support of retaining our state estate tax:
Gov. Christine Gregoire’s proposed revised estate tax would only apply to about 250 people per year yet would generate $129 million for essential government programs. This is a tax that makes sense.
Exactly how does NOT IMPOSING A TAX “shift even more tax burden onto working families” as you allege? Maybe you should be venting over the cigarette tax increase or the lottery, or the planned gas tax increase, which are the most regressive of them all. You lose all your crediblity regarding tax reform when you revert to “I never met a tax I didn’t like” mode. What ever happened to your support for real tax reform, Goldy?
Mr. Gates Sr. made his fortune at Preston Gates and Ellis, preferred law firm of state and municipal government. He is biased in favor of his former numero uno gravy train client and I for one am sick and tired of all the credibility he has been handed on the tax issue. The press and liberals seem to worship him on a pedestal regarding tax issues, only because he agrees with them. This guy is as biased as Don!
Here are two good reasons not to reinstate the estate tax: 1: Taxes in this state are high enough already. 2: If the state just keeps adding to the mish mash we already have, that delays real tax reform.
Furthermore, the main reason an estate tax is bogus trickery on the part of government is that the estate is comprised of AFTER-TAX assets. If a citizen pays all his taxes as he makes a living and he accumulates assets with what is left after he pays those taxes, it is unfair to tax these assets again when the peron dies and just wants to pass the assets along to his children.
The super-rich can afford to spend money setting up trusts, hiring tax lawyers to finnagle their estates, etc. to avoid the estate tax. It is the hard working person whose assets are tied up in a business or property who gets squeezed by this one.
zip @ 1&2 I do not understand your position. We have had this tax for so many years. How can you say it is an ‘additional’ tax? We need to keep this tax to have a slim chance at balancing the budget!!!
There is a tautology that has been created in the minds of many conservatives that taxes automatically destroy the business climate. This idea has been advanced aggressively for years by Mr. Grover Norquist and passed on through the usual channels.
If you can find me someone who LIKES paying taxes, I’ll send you a cookie. Needless to say, it’s pretty easy to find business owners, ordinary people, or whomever you want to complain about how heavily they are taxed.
So anyhow, I thought I’d check with the World Economic Forum. This is a talk-shop of business leaders who meet every year to talk about global trade and development issues. They publish a yearly report of the world’s most competitive economies. These are the countries that are most successful at generating wealth. You can find this year’s list here:
http://www.weforum.org/site/ho.....ess+Report
Let’s see. The United States is near the top of the list (#2). Good. Sharing the top spaces are… Finland, Sweden, Taiwan, Denmark, and Norway.
Of these, the only one with an economy vaguely like the US is Taiwan. FWIW, Taiwan has a tax structure that is very light on working folks (I paid 6% in income tax when I drew a salary there, as did most of my friends with professional jobs), but draws a lot more (up to 50%) on higher tax brackets.
The point is not that raising your income tax rate to 50% is good for business in and of itself. You might wind up with Finland, true. Then again, you might wind up with France. It’s a multivariable equation. What is the education level of the local workforce? How easy is it to raise capital in the marketplace? How much of your time is spent complying with regulations, etc. etc. The formula on what makes someplace good for business has a lot of variables involved. Some can be fixed by legislative fiat, like regulatory burdens. Some can’t, like uneducated workers or a lack of usable real estate.
My point is that if low taxes by themselves make a country, state, or region such a great business environment, why isn’t investment streaming into Hong Kong, or South Korea, or Turkey, or any of a number of other places which are predicated on very low tax bases?
tax break for the wealthy? you must mean you want to keep an additional tax on those who have accumulated assets. even many democrats on the national level talk of a $3.5 million starting point, not $2 million.
we’ve had the B&O tax for a long time, too. and it is a terrible, antibusiness tax that drives companies out and keeps others from entering. it ought to disappear also. just because we’ve had bad taxes for a long time is hardly a reason to keep them longer. talk about a poor argument !
the rich can easily find/reside in a second home in a more favorable state taxwise. you democrats and your “love every tax, even spam tax” attitude will result in primary residences turning out to be elsewhere. your “rob the rich” attitude drives out persons any other state will be happy to have as residents. more “smart” thinking: let’s send the welloff a message: “take yourselves and your money elsewhere!”
you should work on ways to make WA a state that is receptive to successful businesses and persons. instead, you drive them away and then wonder why state tax revenues fall short of your wishes. many other states understand this. but not the democrats in this state.
Okay, guys – several years ago the Skagit Valley Herald – my newspaper did an editorial about this. Strongly supports chucking it in light of the fact that this turns family-owned newspapers into corporate newspapers…
Let’s do away with all taxes.
Obviously they are bad.
They do no good.
Let’s nevery pay any tax again.
7: let’s tax everything at 100%. since taxes are so good. then see what happens to the economy. grow up.
I have a couple questions on this subject and am wondering if some of the Sea Lawyers on this board can help me out.
1. The Supreme Court (State or Federal?) ruled on the matter of a State estate tax recently and said to do away with this, correct? Then why is this even back in the disucssion of lost budget or future revenues?
2. Is anyone satisfied with the controls on spending with this State? I certainly am not and the proposed Tax increases just add fuel to my fire. I hear our politicians screaming about how we don’t have enough money, yet find no evidence on anyone trying to conrol or even account for where these monies go.
Zip @1&2,
I know you’re the kind of guy who actually reads my posts, so you understand fully that we’re not talking about imposing a new tax. We’re talking about retaining a tax we’ve had for over a century, while more than doubling the exemption to $2 million. This is not a new tax and you know it. So yes, eliminating the estate tax would shift burden in the form of higher taxes, or fewer services. (And to bring Gates’ law practice into this is a red herring… he and his family have much to lose from the estate tax.)
I also find it amusing when I hear Republican’s attacking the estate tax by saying the rich can finagle their ways out of it, while the poor can’t. The poor don’t pay the estate tax. Indeed, at the proposed exemption rates, only 250 estates a year would pay an estate tax.
Rush @5,
Fine… you want to eliminate the B&O tax, I’m with you. So tell me, what do you want to replace it with? Would you join me in supporting the Sims plan, that eliminated the both the sales and B&O taxes, and replaced them with a graduated tax on personal income? That’s right… no direct tax on business whatsoever! Would that work for you?
Or is the truth really that you just don’t like government, and any tax reform that doesn’t starve the beast just isn’t going to cut it for you, no matter how pro-business it is?
And to all of you…
Man… what’s with this unbounded concern for the plight of rich people, without an ounce of compassion for the poor and middle class? We have a tax structure that is totally out of whack, and our first priority should be lowering taxes on the estates of multi-millionaires?
prr @9,
I’m no lawyer (much to my mother’s chagrin), but the Supreme Court did not rule that an estate tax was unconstitutional… it ruled that the current tax, as written, could no longer be collected because it was tied to the federal exemption that is being phased out. So the statute merely needs to be amended to remove the tie to the federal tax code.
As to your second question… tell me, what would satisfy you? Is there an objective test that could meet your demands?
As a former major leaguer, I’d like to thank the legions of brainwashed middle and lower income Americans who make it possible for me to live like this. Give public school teachers a cost of living adjustment after three years? Why should I care – my kids go to private schools. And now that the estate tax is going away – those lucky rugrats will never have to work a day in their lives! Thanks, suckers!
Goldy: I don’t like taxes. true. but starve the beast? Gregoire’s budget spending is up 11% in 2 years and WA Senate democrats think this is not enough? I believe the beast weighs 425 and republicans would be glad to get it under 400 and democrats would like the beast over 500.
taxes that are most supportable by me include: high sin taxes (liquor and cigarettes) and even the gas tax. I also did think Sims proposal was gutsy and interesting. and yet he bombed as a democratic candidate vs Gregoire. why? she certainly wasn’t highly popular. does it just take many years to slowly change people’s thinking? IF the income tax was not excessive at higher earnings, I could see a change in eliminating sales taxes and the B&O tax. it would help business significantly. not just the elimination of the B&O but the sales tax involves lots of waste in its collection. a state income tax can be figured easily via the fedeal income tax. I think the Sims idea could have resulted in less waste and more growth and therefore more jobs. I am certainly a republican. but if the democrats turned thumbs down, what are the chances of change? was it just the messenger, not the message? was it just fear of anything new? Sims did talk about it and run ads. and it (and his campaign) died quickly.
my hope would be growth and jobs would make for suffient state revenues without constantly increasing marginal tax rates. I hope that more people are taxed due to higher incomes and therefore have an incentive to keep the beast under 400. when most persons pay little or nothing, it is easy for them to just go after the rich. the rich should pay more. but I hope our economy can be strong enough that the number of payers would increase.
the Sims proposal is more likely to produce a stronger state business environment than our current system. this is also much more important to more people than worry over how to tax the estates of the fortunate or to tax spam. it is high time for this topic to be discussed openly.
Man… what’s with this unbounded concern for the plight of rich people, without an ounce of compassion for the poor and middle class? We have a tax structure that is totally out of whack, and our first priority should be lowering taxes on the estates of multi-millionaires?
Well, you know Goldy. Politics moves in cycles. This deal with the Englightenment and vesting power in the citizenry and whatnot has been going on for 500 years now, and to what good? Do men still not get ill, wither, and die? Are there still simple and illiterate people in the land? Have we all been granted 77 virgins here on earth to use as we please?
No, the Enlightenment is pretty over-rated. In feudal societies, people knew their place, and the crime rate was a lot lower. Let’s pick that up and give it a try again.
zip @ various
What I view are two good reasons for having an estate tax are that it is a progressive tax, and it has a social purpose, the redistribution of wealth (although at the levels proposed, there isn’t going to be much redistributing going on). Of course one can argue that government ought not to be in the business of redistributing wealth, but, in case no one has noticed, today’s America is beginning to resemble the America of 1890. Most people who give it serious thought, I believe, concede that a downside of capitalism is that over time it concentrates wealth in very few hands. Wealth equates to power, and as time goes by, the oligarchy we live in gets narrower and narrower.
Hey I have an idea, lets not reinstate the estate tax, lets not incease the tax in tobbacco, alcohol, ans Spam. Let us have the state live within its means.
Most family businesses get sold because there is no son or daughter interested in carrying on the business and capable of doing so.
zip @ 1
If I’m biased, what are you?
zip @ 2
Net worth of $2 million is not rich? I’d sure take it, especially if it was handed to me by a will without my having to invest any funds, take any risk, or break a sweat. However, I will never inherit $2 million or even a 10th of that.
jpgee @ 3
What’s so hard to understand? He’s lying, and he knows it.
Rush @ 13
What do you mean by “income tax excessive … at higher earnings”? If a flat-rate state income tax is proposed, would you support it? Do you have any idea what the tax rate would have to be to eliminate both the sales and B & O taxes?
jsa @ 14
Who in their right mind wants 77 virgins? You’d have to be insane. We should give terrorists their 77 virgins in advance, then let’s see them deal with it. They’ve got it coming.
19. yes I would support a flat income tax. definitely. we are paying these taxes already directly or indirectly. our businesses would do better this way and more jobs would open.
so tell me, what would be the flat tax rate?
then tell me if such a rate would make our citizens more aware of what state government costs? would more want an under 400 pound beast or a 500 pound one?
Here’s an argument for someone to tear apart. If a person dies with no assets at all, but somehow has managed to incur $2 million in uncolateralized debts, should the children of that person be required to pay off the creditors? If the answer is no, why should the reverse be true?
also: I would make a significant “deductible” before the flat tax kicked in. low income workers and families would be significiantly better off than under our current regressive system.
Rush @21,
I’d much prefer a progressive income tax, but I would take a flat rate with a meaningful exemption, over what we have now.
Yes… yes! That is the debate we should be having… the debate over the proper size and scope of government! When we only argue over taxes we have the entire discussion ass-backwards. But this is a debate the Grover Nordquists of this world refuse to have… because they know they’d lose.
And what are these businesses that would supposedly collapse if they were ever exposed to arm’s-length sale? Aren’t they necessarily diseconomic ventures, engaged in less than optimal conversion of their factors of production into goods and services?
Marketarians owe us some explanations. Why should society maintain this system of implicit subsidy to a class of otherwise sub-marginal entrepreneurs?
Goldy @ 11
Thanks for the clarification on the 1st question.
As to the 2nd,
let me give you an example of where I am coming. My wife works for the State.
A while ago, she ordered perosnal stationary for her office. To have the pads printed up with each persons name and e-mail address costs the taxpayers $129 per employee in her office. How many sheets of stationary were there for this money? they each received 10 pads with approcimatey 100 sheets in a pad.
Any idea what that would have cost to have that same job done @ Kinkos? I am guessing about $25.
If this is just one example of the waste that occurs, what does that say about the overall budget?
Goldly on 24: the compromise between a progressive tax and a flat tax seems to be a flat tax with a fairly high exception (say $40,000 pre deductions). this means that all those struggling as working “poor” or at least not well off pay no state income tax. those making say $75,000 do pay but only on the amount over $40,000 which still means a modest level of tax (a tax cut from current levels). those making over this level ($75,000 or $80,000) would likely pay more than under the current system. and as you well realize, they can best afford it.
the benefits? those struggling have a big cut in their state taxes (the same people for whom Social Security is a higher “tax” than the effective federal income tax). businesses are MUCH better off being rid of the horrible B&O tax. the top 30% of earners will be worse off directly. but many of them will benefit by the improved business climate in this state as an offset.
the fear? many do not believe that once income tax rates are set, that they will remain at said levels. there is no trust in our officials to not tax more / spend more.
but this last paragraph applies to a largely republican worry. why didn’t more democrats embrace Sims plan? is a major change in our states’s tax structure hopeless politically? I also do not know the level of state income tax that this flat tax with a large exception would need to be. I would like Dubyasux or anyone with such knowledge to tell me. I am assuming it would approximate 10%. I consider this the top of a tolerable rate for political support.
Dubyasux @ 20:
I dunno. I’m told virgins are a really great thing. Never cared for ’em much myself. On the other hand, there’s a lot of things in the world that people have told me are the shizznit (XO brandy, fussy Italian motor vehicles, designer clothes, cocaine, and so on) which I have absolutely no use for whatsoever, so who am I to judge?
I agree 77 virgins in advance would take care of a lot of terrorist issues. I’ve been looking around for virgins in my neigborhood to appease potential terrorists, angry volcanoes, etc., and haven’t spotted one yet. I’ll keep asking around though.
Rush @ 27
I would consider myself right of center, and typically vote Republican. While I have absolutely no respect at all for Ron Sims, I also found myself interested in his plan, and thought at face value that it made sense.
I had some questions though. I wondered what part of the underground economy currently being captured by sales tax would be lost, and what impact that would have on total taxes collected. Given a second thought, I am not sure I would want drug dealers, prostitutes, illegal aliens, etc. to get away without paying their fair share of taxes.
If this income tax plan were to have ever been approved I would have wanted some assurances that the revenue sources it was replacing were cut off.
prr @ 26:
Just as an FYI, $126 for offset printed stationery is pretty much the going rate. That’s what we pay for an order in my (private-sector) office plus or minus 10%. If someone was creative, you could take the original letterhead, laser print it, and copy it. That would bring the cost down. It wouldn’t look as nice as offset-printed stationery, but so it goes.
Admittedly, we are very stingy with the stationery here. Employees do not get 10 boxes of the stuff delivered to them “just in case”. There are 10 boxes in the supply room. If you need to write a letter on company letterhead, run it through the printer and print your own name at the top.
Folks, I just despise the MEANS of taxation.
Chuck the estate & property taxes and replace it w/ a means of income tax, I daresay.
jsa @ 30
Now you are off the mark.
1. these are not boxes, they are pads.
2. While I am going to keep my occupation out of this, I have dealt with thousands of print purchase and no, this is not on the mark with the outside sector. The print purchase for the entire office was put in at one time and these guys were blatantly overbilled. Additionally, we are not speaking about about 8.5 by 11 sheets, we are discussing scratch pads.
Especially considering it went to a state print shop, where the could have ganged the entire job together and run this on in-house paper stock and gotten these for pennies on the dollar.
prr @ 32,
I may have misread. I stand corrected.
Custom-printed scratch pads? Ummmmmmmm. I have to admit, that’s a bit extravagant. I have never had a job where I merited a scratch pad with my name on it.
I’m not sure what’s more offensive: the selfish efforts to secure yet another tax break for the wealthy, or the bogus and insulting economic threats with which they are trying to sell it.
Yeah its pretty wacky to see the wealthy who don’t want to pay any tax at all while the rest of us pay a ton. If we are going to “starve the beast,” lets eliminate taxes on wages first, not on the wealthy heirs.
Goldy @ 10. First, I’ll go along with you in supporting the Simas plan.
As for the estate tax, is it a good tax, bad tax, we’ve had it before, should we have it again, is it double taxation? Not really the question. Do we as a society believe that it is appropriate to redistribute wealth at death, when that wealth was accumulated in part as a consequence of living in this society? In fairness, the answer must be yes, in my opinion.
BUT, the issue remains how much? Most of my experience with the estate tax is at the federal level, so it may have lesser application to a state tax. The estate tax is sold as a tax on the rich, but the first issue to resolve is who is “rich.” Some of the proposals touted in this state would tax estates starting at $950,000. Speaking as the single father of two teen-agers, my assets consist of a house I bought 20 years ago and a life insurance policy. Under the $950,000 definition of rich, my estate might be taxed. But I sure don’t live or feel rich. One of the reasons the GOP has found such traction in the middle class against an estate tax is that the federal estate tax never really was much of a tax on the rich. Tax avoidnace has been the lawyer’s and accountant’s favorite sport since there were first rich people and lawyers and accountants. Under the federal tax, the rich paid nothing close to the amounts projected (in fact, the tax didn’t raise much money at the federal level), because they paid exorbitant fees to tax planners to minimize the tax. But the middle class gradually crept into the definition of “rich,” necessitating at least minimal planning. Especially at the old $600,000 level that was fixed for years. But the middle class could not afford the high-priced tax planners that the rich could, so many lived in fear of the estate tax (whether there really was a significant impact is another matter, but the fear was there).
So this is a long-winded way of saying I support an estate tax provided:
BF on 29: good point on the large “underground” economy. I do not have an answer unless it is a reduced sales tax with a more modest income tax.
I am still wondering if any of our democratic “friends” on this blog will comment on why they think Sims income tax proposal went dead? and if it has merit, with Gregoire eventually move in that direction? she sure isn’t much of a political risk taker, however.
I am still wondering if any of our democratic “friends” on this blog will comment on why they think Sims income tax proposal went dead?
Because its a bad idea and unpopular at that.
and if it has merit, with Gregoire eventually move in that direction?
No. Not a chance.
I sort of like the B&O tax with all of its flaws. The reason is that it is very easy to calculate and firms are not spending great deals of money trying to show that they didn’t make a profit. The B&O tax already varies depending upon the business.
Many democrats complain that the tax system in Washington is regressive, like Gooldy. They are right. However, I would like to see if it is really that regressive after the sin taxes are removed from the equation.
However, I would like to see if it is really that regressive after the sin taxes are removed from the equation.
Erik,
I’m not sure I understand what you are saying there.
I’m not sure I understand what you are saying there.
Lower income people pay a large portion of their income for sin taxes.
Erik: the B&O is a horrible tax. it is paid whether or not a business makes money. in other words, it can be the difference in putting businesses out of business. it also gets “factored into prices” to some degree, making costs and selling prices for instate companies higher than for out of state corporations. this means our own companies are at a competitive disadvantage. you may like it but few people in business do. taxing profit is better than the B&O.
you are clearly a democrat. so why do you say the Sims proposal is a bad idea? please give me the reasons why a democrat would say so…
re sin taxes: too bad. if low income workers want to spend on booze and smokes they should pay high costs as such others. many will end up clogging our medical system with their health problems. if high costs have curtailed their consumption, so much the better.
I actually agree with Rush on sin taxes. Caveat playor, or drinkor, or smokor. Participation is entirely voluntary, and to the extent that they are addictive behaviors, price pressure is a positive in bringing issues to a head more quickly. Either you do less, or you go broke faster–and between going broke and becoming dead, I think society would prefer “broke.” Furthermore, evidence exists to suggest that cigarette taxes can, at high enough levels, diminish cigarette use. Finally, the taxes are in essence user fees, which IMO is the fairest way to tax something in order to recoup social costs. If we taxed fuel based on weight of the car it went into, you’d see maassive savings in transportation/infrastructure. People would buy lighter cars, which would reduce fuel consumption and wear and tear on roadways. Exempt public transportation, and create a separate scheme for freight handling, and you’ve got a socially responsible process.
prr @ 26
What agency does she work for?
jsa @ 28
They require too damn much assembly and painting.
Josef @ 31
That one’s negotiable, although if we eliminate the property tax, we’ll probably have to keep the B & O tax. I think getting rid of the B & O should be Job #1. Not only because of the financial burden on struggling busnesses, but just think of the time and paperwork it’ll save for business owners.
Goldy and his gang of cheerleaders:
The democrats are 100% in control of everything that happens tax-wise right now and you want to let them get away with pasting more pieces onto this hodge podge tax structure? By supporting their ADDING A NEW TAX with this estate tax, you are “enabling” them to not do the right thing. They may find (if they ever grow the balls to propose it) that serious reform of our tax structure would gain support of many wing nuts of my ilk.
The best reason to oppose this tax is that it delays reform of our screw the poor/ screw small business tax structure.
According to the IRS, in 2003 (the latest year for which statistics are available) federal estate tax revenues were $20.6 billion of which $371.3 million was collected from Washington estates. http://www.irs.gov/taxstats/article/0,,id=96442,00.html
According to a tax policy paper I read, the cost of repealing the federal estate tax for 10 years (2011 – 2020) would be $1 trillion after factoring in interest on the national debt. http://www.cbpp.org/3-16-05tax.htm
zip @ 44
It’s not a new tax. What they’re talking about is cutting the estate tax we’ve had for decades by 50%. Quit bitching about this tax cut. Or would you rather pay higher sales taxes?
Erik @ 36:
They are right. However, I would like to see if it is really that regressive after the sin taxes are removed from the equation.
Sin taxes are bad, as you have mentioned, since they soak the poor. (Those damned poor. If only they didn’t drink, smoke, and play the lottery, they’d all be wealthy!).
The regressive nature of the sales tax should be fairly self-evident after a bit of thought.
Poor folks (theoretically) eat cheap food, drive cheap cars, wear cheap clothes, and X% of their income is taxable.
People who are better off eat better food, drive better cars, wear better clothes, and a number pretty close to X% of their income is also taxable, we’d figure.
Once you get up into, say, the top 10%, unless the person is a really prolifigate consumer (I know a few), that taxable percentage gets to be a smaller and smaller number and the percentage which hits their bank account or investment portfolio (free of sales taxes), gets larger and larger.
With one or two rather notable exceptions, everyone I know who is a high wage earner is a disaster for the tax office. They’re not misers, but they make a LOT more than they spend, plain and simple. The two exceptions? They both hate paying taxes so much that they scheme to have cars purchased in Oregon and other silliness to try to dodge sales tax (please, don’t ask. I don’t know, I don’t condone this, and I don’t have any meaningful opinion as to its legality. I’m just sayin’), and buy their toys over the net so as to avoid state sales taxes on the little things like $1000 cameras and whatnot.
I don’t begrudge these folks anything. Most of them work hard for what they get. They’re more focused on money than I am in a lot of cases, and that’s fine. As a matter of course though, it’s bad public policy to give them a bye on paying taxes.
Goldy @ 10
Incorrect. Bill Gates Sr. has absolutely nothing to lose by the estate tax. Bill Gates Jr. has something to lose, but it’s insignificant. He’ll remain the richest person in the world with or without it. The children of Bill Gates Jr. have the most to lose, but they’ll be billionaires either way and unlike their father and grandfather they probably won’t have to work.
The idea that Bill Gates Sr. could be a credible advocate for this tax because his grandchildren will only have a few billion versus several billion is a joke.
Furthermore, just because you don’t like the repeal, doesn’t mean the rest of us should just ignore the constitution.
I favor the estate tax, but I would prefer to see valid arguments from economists or people who are actually affected by the tax. Billionaires out to change the world through forcing other people to pay should shut the fuck up.
Something to think about, is a name of noteriety tax. Lets say as example if you earn a certain amount of fame with your name then upon your death if your offspring choose to carry on the name they should be taxed for that choice. It only promotes lazyness to do otherwise. There are certain mames that give the person that inherits them a hand up that is not deserved. Take the Bill Gates example, one of the richest in the world, now if his son takes the same name he geys a leg up that he never earned. Another example is Dale Earnhart. Al Unser and George Bush are but a few others, GW may have never made it if it werent for dad! He should be taxed for that! Names like Fonda, as well as Presley are the same thing. Possibly do it like an estate tax, figure the financial gain from keeping and using such a name and if the person doesnt want to pay the tax then the name and its noteriety are to be auctioned to the highest bidder and the proceeds go to the state to help pay for programs for poor people that want handouts…I guess Goldy’s offspring would have to pay a bit for name rights but people like Dubyasux, Diggundude, as well as zip, their offspring might actually RECIEVE money under the right program.
Don @ 46
We presently have no estate tax. Gregoire has proposed a new estate tax. “Look it up”.
Goldy @ 10
What I said was “It is the hard working person whose assets are tied up in a business or property who gets squeezed by” the planned NEW estate tax. This is the reason so many business owners are against the estate tax. I never said the poor have anything to lose with this.
You guys love to support your NEW estate tax with all kinds of Mr. Gates Sr. testimonials. What the tax means is more small businesses sold to big corporations rather than passed along to heirs. Next you’ll be whining over the corporations taking over the economy.
Goldy again
You have not responded to my claim that “You lose all your credibility regarding tax reform when you revert to “I never met a tax I didn’t like” mode.” This applies equally to all the so called Progressives inthe Legislature. By letting these jokers get away with this ridiculous program of super-regressive taxes and then trying to make it look progressive by layering an estate tax on top you are saying that the “ends justify the means, as long as the ends provide more revenue to the State”.
You can’t give me grief over “not supporting” the Sims plan for two big reasons: 1. the Dems have never come close to proposing anything but the same old mickey mouse taxes since they took control. 2. I do support the Sims plan believe it or not.
re sin taxes: too bad. if low income workers want to spend on booze and smokes they should pay high costs as such others. many will end up clogging our medical system with their health problems. if high costs have curtailed their consumption, so much the better.
I agree completely. That’s why I question studies which claim that taxes in Washington are “regressive” because they have not taken out the sin taxes. Only then can we see the true picture.
The entire tax system is based on social engineering since day one in our country. For instance, farmers are treated differently tax wise in more catagories than any other class in the tax code.
The fact of the matter is that poor folks need to be engineered as much as the rest of us.
Erik: the B&O is a horrible tax. it is paid whether or not a business makes money. in other words, it can be the difference in putting businesses out of business.
I agree with the latter. However, businesses that are losing money still require the same government resources as profitable ones as they drive trucks and vehicles on the roads, damaging them, and pollute the air. One still has to pay their utilities if they are losing money, why not the B&O tax?
Plus, if a business can’t figure out how to be profitable, they shouldn’t be rewarded for their ineptness and their tax burden shifted on the successful businesses.
The current B&O tax is like a user tax for government services. Not a bad model and certainly easy to compute and does not create perverse incentives for businesses.
There are some people, including a few in Washington State, who are so wealthy that any problems money can solve have been solved for them and their families. This will remain true, as IRS @ 48 points out, regardless of whether they must pay an estate tax of 20 or 30%. They are standing testaments to the marginal value of money theory, and the incentive effects of the estate tax are largely irrelevant with respect to them.
The interesting question is how the estate tax will affect the earning and savings habits of those whose wealth level is just below and just above the exclusion level for the tax. Goldstein seems supremely uninterested in this question. We have been taxing these people since 1901, he says, and raking in millions. What’s the problem? The problem is that richer is better, both for individuals and the state. The larger the personal savings level, the larger the consumption level the state can tax. We will all be better off to let the wealth base grow and tax it only when spent.
zip @51,
I have come out again and again in support of the Sims plan, that would eliminate both the state sales and B&O tax. I voted against the monorail and the latte tax, and I have talked repeatedly about the ultra-regressive nature of excise taxes. Anybody who has consistently read my blog would know that your accusation that I “never met a tax I didn’t like” is just plain silly. Just because you say it is so — repeatedly — doesn’t make it so.
Erik, the B&O tax is regressive on businesses, get it? The small business that can least afford it pays at the same rate as the mega-business. There are zero deductions, it is paid on the first dollar of revenue, not based on profitability.
As for your support of sin taxes, how do you support the lottery, where the State spends big bucks on catchy advertising to try to suck more money out of the poor.
Dubyasux @43
Okay
Okay Goldy where did our Governor even spend 5 minutes thinking about any kind of reform before she came up with this regressive pot pourri of tax hikes? By posting such strong support of her plan on your site, you enable her and her legislative boot lickers to ignore the need for reform of our screwed up system.
As a reader of your blog, let me put it to you this way: your credibility sucks on this tax deal. You need to decide if you want to be a partisan hack regurgitating whatever the Democrats running this state are proposing at the moment, or do you want to push for some important issues you obviously believe in like reforming our screwed up tax system. IMHO, you can’t have it both ways. (Unless you’re practicing your Dave Ross routine for the radio show).
They are standing testaments to the marginal value of money theory, and the incentive effects of the estate tax are largely irrelevant with respect to them
Good. Then they shouldn’t mind paying it.
The interesting question is how the estate tax will affect the earning and savings habits of those whose wealth level is just below and just above the exclusion level for the tax.
It wouldn’t effect it at all as the estate tax would only apply to the amount inherited over $2,000,000. Thus, a $2,100,000 estate might pay $16,000 in taxes or less than one percent.
We will all be better off to let the wealth base grow and tax it only when spent.
I disagree. We would be better off not gouging the middle class with a 40 percent tax rate on wages while the wealthiest manuever themselves to pay zero taxes. Is it too much to ask them to pay some portion of taxes for Washington. Geesh.
That’s one (of the few) reasons I like a flat tax rate on property. At least the wealthy are forced to pay some taxes here.
Erik, the “estate” that is taxed when I die is comprised of whatever I have left AFTER I PAID TAXES ON MY INCOME, PROPERTY, ETC. for my entire lifetime accumulating said “estate”. So I did pay my taxes, didn’t I?
Erik, the “estate” that is taxed when I die is comprised of whatever I have left AFTER I PAID TAXES ON MY INCOME, PROPERTY, ETC. for my entire lifetime accumulating said “estate”. So I did pay my taxes, didn’t I?
It depends. By dying, you will have avoided all capital gains taxes from your investments. If the funds were in stock or land, you would have owed capital gains for the increase in value if you sold the day before you died.
However, your heirs will have the “basis” for the land or stock re-set to the level when they received the property and neither you nor your heirs would have had to pay any tax whatsoever for the profits.
Your senario make the most sense for your argument when the funds were earned from wages and never gained any value through investments.
It makes the least sense as time passes and the increase in wealth is due almost entirely from the increase in investment value and the wealth is passed from generation to generation, as some trusts are, and no generation ever has to pay any tax as the basis keeps getting re-set and they avoid estate tax.
Erik,
The trusts that pass from generation to generation are used by the ultra rich not the working rich. The Gregoire estate tax would snare the working rich: anybody who owns both a business and a relatively pricey house.
You seem to be suggesting to adjust the heirs’s cost basis of inherited property back to the original cost basis. It makes sense and is fair (but only if an inflation step up in basis is allowed). It would only apply to your federal taxes and would not work in this state becuase we don’t have an income/cap gains tax. Further proof that major reform is what’s needed, not willy nilly patch jobs on our tax system.
I have update my post to include a link to an editorial in Tuesday’s Seattle P-I in support of retaining the estate tax.
The Gregoire estate tax would snare the working rich: anybody who owns both a business and a relatively pricey house.
Nah, with a $2,000,000 limit, no one will have to pay any tax upon death as long as they don’t have more than $5 – $6,000,000 that they are trying to move to their heirs with proper planning.
Only on the amount over this amount will be sum will be taxable.
The money has to come from somewhere, why should the wealthiest heirs be exempt, they didn’t do anything to earn it unlike wage earners and small business owners.
Guys, great news! As the clever PI points out, this tax only fucks 250 families per year. Brilliant! I wish all our budget woes could be solved by fucking 250 families per year.
IRS@64
Then if it was so you would fuck 250 families per year?
Guys, great news! As the clever PI points out, this tax only f@@@ 250 families per year. Brilliant!
So sad.
Now they can enjoy participating in paying taxes like the rest of us, albeit at a lower rate.
Erik@66
Hey genius, tell me which of those 250 arent already paying taxes like a mother fucker? Inquiring minds want to know….
Talk to any apartment manager. The lazy bastards that dont
pay their rent (no shirt, tattoos, chain holding their wallet,
couple of teeth missing in front) and after months of legal
challenge finally get them out. Beer cans, lottery tickets,
and empty cartons of cigarettes thrown everywhere. You have
to use a rake to clean up. I think this is tax the lazy not
the poor, which is excellent. The State and Counties get a certain percentage of the “action” be it sales tax, prop tax etc. The sheer volume of gross revenues go up every year so why do they continually need a higher percentage of these
taxes. They get huge increases every year as it is. I say
quit fucking with the rich business owners, (there are no
people in the Forbes 500 that have a “job”) but their hard
work and risk (as in not 9-5 and not sure if the check will
be there on Friday). Business owners pay plenty of taxes
especially in this state. I can gaurantee you if each
individual in this state were to pay their share of all
payroll taxes both state and federal there would never be
another democrat elected. EVER. Want to balance the budget?
Can about 20,000 government employees at all levels. Done.
Now we have money for road repairs. Maybe the people
who got canned could get a job with the road crew shovelling
some dirt. At least they would be providing a service instead
of being overhead to the taxpayer. Another thing I hear is the
rich have all these tax “loopholes”. No such thing. It is either a business expense or its not. Never had anyone who
could explain a “loophole”. IRS does not have 1040L, I asked.
Mark @ 68
As I have said before I (as a business owner) do not have any problem paying an estate tax on money that I will be able to pass on to my heirs. No problem what so ever. I’m dead and you get to tax me for being a hard working successful person with ideas. i should consider it an honor to pay it.
What I am against is having to sell my businesses to satisfy my tax burden. It’s counter productive to make me sell something that could put people out of work just to add more money to a system that rewards people for not working. (or in some cases working stiffs for the state) take my money not my businesses.
I also find it funny that Goldy hasn’t spoken out against the “canned meat” tax the demo’s are proposing in olympia. Rich people don’t eat Spam. It’s a regressive tax that only could come from the democrats. I think forest gump said it best ….stupid is as stupid does. and this is one of the dumbest taxes I have heard of in a long time. What’s next, a tax on fecal output? Nope that would drain the democrats of all of their money.