Politics The Seattle Times: Predictable. And Predictably Wrong.
We knew it was coming. And it did.
Yesterday, the Seattle Times published an anti-estate tax editorial.
What a load.
Here’s the lead graph (footnotes are mine):
The Seattle Times opposes all estate taxes. This state’s death tax, which has a top rate of 19 percent (1), is joined to a federal death tax (2) that has a permanent top rate of 55 percent (3). The supporters of this tax argue that it is OK because it applies only to estates over $2 million.(4) But this is a tax on assets, not cash in hand. There is scarcely a block in Seattle that does not have $2 million worth of houses on it (5), and in business, $2 million is fairly small change.
(1) The first $2-4 million (single/couple) is exempt from the tax. This means the full value of the estate isn’t taxed at 19%. In fact, the rate is graduated, so 19% hits only a portion of an estate that is valued well above $4 million. (In fact, the 19% doesn’t kick in until $9 million.) Because of the $2-$4 million exemption (and the $5 million that isn’t taxed at 19%), the net effective tax rate is far less.
(2) Up to 46% of your state estate tax payment is deductible from your federal taxes.
(3) The current top rate for the federal estate tax is 46%, not 55%. Get your facts right.
(4) That’s right. The state estate tax only applies to estates valued over $2 million for an individual or $4 million for a couple. That means: Of the 47,000 deaths in Washington state estimated to happen in 2006 less than 250 estates will pay the tax: One half of one percent of the richest estates. In other words: More than 99.5% of Washington estates don’t pay the tax.
(5) “There is scarcely a block in Seattle that does not have $2 million worth of houses on it…” Yes, I guess if you add up the values of all the houses on a block in Seattle, it probably does come out to $2 million, but that’s kind of irrelevant (or intentionally misleading…or just poorly written…) The fact remains: Only 250 estates will be affected by the tax. Again: 99.5% of estates wont pay.
The Seattle Times editorial concludes:
The final argument for this tax is that government is sorry to impose it, but that government needs the money. This is nonsense.(6) The federal tax brings in barely 1 percent of revenues.
(6) Nonsense? The tax brings in $100 million a year. It all goes to targeted education funding like creating 7,900 higher ed slots, increased financial aid for college students, and a learning assistance program for K-12 students. Indeed, this is a small percentage of revenues (state revenues are about $13 billion). Look, it’s certainly a shame that these education programs make up such a small portion of state spending, but don’t blame the victim, man. Again: That small percentage goes to school funding. If the state drops the tax on the richest one half of one percent of estates, who does the Seattle Times think should make up the difference?
I've always been torn on estate taxes. On one hand it seems unfair to have to pay tax on an asset that you've already paid a number of taxes on over the years.
On the other hand it does end up funding a myriad of important social programs.
I also think the "it only effects 0.5% of residents" isn't the best justification for a tax. If we woke up tomorrow and found out the Bush administration decided to levy a Fag Tax (hey only a small minority has to pay it!) next year there would be hell to pay.