Politics from the Palouse to Puget Sound

Wednesday, October 04, 2006

"Foes fear I-920 will harm schools"

This article ran in today's Moscow-Pullman Daily News:
Washington voters will have to choose in November between eliminating a tax some believe is unfair or taking a source of revenue away from the state’s education system.

Initiative 920 is a ballot measure designed to repeal the estate tax enacted by the Legislature in 2005. Proponents say the initiative is necessary to protect small, family owned businesses from having to be sold off in pieces by heirs when the owners die.

Opponents say it would harm the state’s education system by eliminating tax revenues dedicated to reducing K-12 class sizes and increasing college enrollments.

“It’s money for an already-strained education system we can’t afford to lose,” said Sandeep Kaushik, communications director for the Committee to Protect Our Children’s Legacy, a coalition that formed to oppose the initiative.

Washington state has struggled with the idea of an estate tax since 1981, when voters approved an initiative repealing the state’s inheritance tax and replaced it with an estate tax equal to the amount a family could tax as a credit against the federally imposed estate tax, according to a summary of Initiative 920 prepared for the Washington State Senate Committee on Ways and Means.

The system was designed to give the state a source of tax revenue without imposing an additional tax beyond what the federal government imposed on an estate after someone’s death.

The Washington Supreme Court struck down the tax in 2005 because it was not an independently operating state tax. The Legislature responded by creating a stand-alone Washington estate tax of between 10 and 19 percent on estates valued at $2 million or more.

All of the money from the 2005 estate tax is deposited into the Education Legacy Trust Account, a fund dedicated to student achievement. The money is used to expand access to higher education by funding new enrollments and financial aid, according to a report from the Office of Financial Management. It also supports reducing class sizes in public schools under Initiative 728, which was passed by voters in 2000.

The Office of Financial Management estimates elimination of the estate tax will cost the Education Legacy Trust Account about $184.5 million for the 2007-2009 biennium, and $223 million in the 2009-2011 biennium.

The Pullman School District draws about 71 percent of its annual $18 million operating budget from state money, said Dan Hornfelt, the district’s executive director of support services.

The district gets about $804,000 from money earmarked by Initiative 728 for class-size reduction and school improvements, Hornfelt said. He didn’t know how much of that might be directly tied to the estate tax, but said any reduction in state funding likely would have some impact on the district.

“We do depend on that money, no doubt about it,” Hornfelt said.

The school district has taken no formal stance on the initiative, but many other groups around the state have.

The initiative is opposed by several labor unions, the League of Education Voters, Parent Teacher Association of Washington, League of Women Voters of Washington, and Washington Association of Churches, among others, Kaushik said.

Supporters include organizations like the Washington Farm Bureau, Association of Washington Businesses and Washington chapter of the National Federation of Independent Businesses, who say they want to protect family-owned businesses from having to sell off assets if an owner dies just to pay the taxes.

“The reality is that the wealthy can avoid this tax through expensive planning or by moving out of state,” NFIB Washington Director Carolyn Logue said in a prepared statement. “It is the smaller, family-owned business that ends up paying this tax, and often their only way out is to sell to large corporations — thus destroying the fabric of our communities.”
Okay, let me get this straight. The unions are against I-920? Why? Oh, that's right, teachers are required to be in the WEA. Think of the union dues that would be lost, heaven forbid, if there were not as many teachers.

What cynical, self-serving fear-mongering. "The children, my God, the children!!" Instead of worrying about access to higher education, perhaps opponents of I-920 ought to concern themselves more where these kids will work when they get out of school. Remember, this is the same cast of characters that are so deadset against the soulless, faceless, mega-corporations that "suck the character and money out of a community." The death tax directly deters the development and growth of home-grown, mom-and-pop businesses they purport to prefer.

Again, a reminder. Schweitzer Engineering Laboratories is a family-owned business. What happens to Pullman when Ed Schweitzer passes and half the company has to be sold off to pay the death tax? You think Pullman schools will have less or more funding after that? What about "living wage" jobs for local graduates?

Vote for I-920 and end the death tax.


Satanic Mechanic said...

Something else to consider is family farms. Some families have huge tracts of lands around here that are assessed in the millions. If a farmer with a lot of land dies, will the family have to liquidate their family farm to pay the estate tax? Farmers do not make a lot of money to begin with. Usually the profits, if any, go right back into seed, chemicals and upkeep or purchase of equipment.
Is it not enough that people pay taxes all their life and those who have been successful in life are to be punished in death with a tax?

On a side note: one of Karl Marx's ten points was doing away with inheritance.

Satanic Mechanic said...
This comment has been removed by a blog administrator.
Satanic Mechanic said...

Just some info, the current death tax is $2 million. I can see Olympia/Commisar Gregoire bringing it down to $1 million, then $500,000 and then for all to pay the death tax for stupid state run programs.
Remember the 9 cent gas tax that we voted against? Gregoire and Olympia brought it back through legislation.

April E. Coggins said...

I wonder how they come up with a projected tax revenue of $184.5 million in 2007-2009 and then expect $223 million (21% increase) in 2009-2011. Are they planning to lower the threshold, raise the rate or do they have ghouls in the backroom calculating actuarial tables and finacial portfolios?