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Tuesday, October 24, 2006

No Contest: Blethen v. Gates on Estate Tax

posted by on October 24 at 9:03 AM

Frank Blethen, the estate-tax-obsessed owner of the Seattle Times, made a royal fool of himself on KUOW’s Weekday, where he debated philanthropist Bill Gates, Sr.yesterday morning on the merits of the tax. (The state estate tax falls on families whose estates are worth $2 million or more, and exempts farmland and timber if they make up more than half of the estate. The money from the tax goes into an education trust fund that pays for public education and student loans.)

Blethen’s opposition to the state estate tax, which could be repealed if a measure called Initiative 920 passes in November, is well documented; it is, in fact, apparently the only reason Blethen’s paper endorsed Sen. Maria Cantwell’s opponent Mike McGavick, with whom the Times editorial board disagrees on nearly every other issue.

After both multimillionaires acknowledged that they would personally pay the state estate tax, Blethen gave this appallingly disingenuous explanation for his opposition to the tax: “The problem with this tax is this tax renders Washington State at a serious economic disadvantage… which is going to come home to haunt us if we don’t repeal this tax.” Already, Blethen claimed, “I’m doing the unimaginable and actually advising members of the Blethen family… to move out of state.” Moreover, Blethen ranted, there has already been “a flight of businesses and wealth from the state in anticipation of this tax.I have talked to a number of people who have already moved their homes to Idaho and Arizona” to flee the tax.

Gates gave this calmand devastatingresponse: “I have a huge appreciation of the things that taxes do for us in this country. … I feel like it’s basically an indebtedness of those of us who’ve been fortunate enough to achieve enough wealth that we pay these taxes. It’s quite appropriate. It’s a recycling of funds. The business of being wealthy is a direct function of personal things like skill and eagerness and ambition and that sort of thing, but a lot of it is luck and even more than most people stop to think about it’s a function of where you live… When the end comes and one has had the enormous pleasure of a life full of discretion and the interesting things that you’re able to do, the choice between passing [wealth] along to heirs or the choice of paying something back to the society that made what happened to you possible … doesn’t seem to me to be much of an argument.”

Blethen, unbowed by Gates’s (pretty much irrefutable) argument, abruptly changed tacks, arguing, incredibly, that he wasn’t against funding public education; he just felt the estate tax went about it the wrong way. His Seattle Times, Blethen said, “has been probably the greatest champions this state has in terms of support for public education… until the Gates Foundation came along. … I think my own education credentials and my family’s and my newspapers’ are impeccable. And if I believed that this would help education and not hurt education and the economy I would be very supportive.”

Blethen then went even further, blaming the state estate tax (which affects a whopping 250 households in Washington State) for the consolidation of industries from media to drugstores to funeral homes. (If Ben Bagdikian was dead, he’d be spinning in his grave. “We went from 100 percent local and regional newspapers… to about 15 percent,” because of the estate tax, Blethen claimed. “You see what used to be very engaged companies in their local communities … almost all owned or soon to be owned by out-of-state absentee corporations.”

Gates countered: “That whole [claim] of small businesses going away is just the most enormous fraud that’s been promulgated on people in the course of this argument… This state has one of the highest levels of starting new businesses. The small business is not going to go away.”

Moreover, Gates argued, Washington State already has one of the most regressive tax systems in the nation. The estate tax is one of the few taxes that makes our system even modestly equitable, he said. “People in the lowest quintile of income pay 18 percent of their money to support the state,” Gates said. Meanwhile, “people in thie highest pay four percent. … We tax poor people more than we do rich people in order to support things like education. The estate tax [helps] to level out the contributions. The equity of that is plain to me.”

RSS icon Comments

1

I remember watching Gates Sr. in action during a Board of Regents meeting at UW. He spent a good chunk of the time bitching about money that was being spent on WSU. "They need to fix water heaters? Well, we must have a few that are broken somewhere! Why are they getting money that we aren't getting?" He was definitely the most entertaining guy in the room.

Posted by kate | October 24, 2006 9:27 AM
2

That's great; I'll have to go back and listen to it.

One thing, though: I'm in agreement with you 100% on this issue, but when you say the tax "affects a whopping 250 households in Washington State," it sounds somewhat disingenuous. That is 250 households annually, correct? And, unlike a normal tax, which would affect more or less the same households each year, this is 250 different households.

I'm not saying that's an argument against the tax, but you might as well be as clear as possible in your arguments.

Posted by Levislade | October 24, 2006 9:27 AM
3

IIRC, the 250 number comes from the existing households that, if said living breadwinner(s) were to pass on right now, they would have to pay the tax.

Also, Blethen is an assbag and this interview makes me laugh at how badly he was exposed.

Posted by Gomez | October 24, 2006 9:30 AM
4

How much of the success and wealth of Bill Gates is due to the character of his dad? That was awesome. Maybe someone could ask HIM to run for governor.

Blethen on the other hand works out of the Bush playbook: run out lists of terrible consequences but never bother to explain the logic connecting those consequences to the policy that enriches you. Because there isn't any.

I was annoyed just now to discover that I can't cancel my Sunday Times subscription while keeping my weekday P-I. They don't offer a weekday-only plan! That's absurd. Please, Frank, sell out to Knight-Ridder (who already own 49% of the Times) and move to goddamn Idaho. You'll love it there. Maybe the old Aryan Nations compound is still on the market.

Posted by Fnarf | October 24, 2006 9:32 AM
5

Bill Gates Sr. is also pumping money into communities like White Center and North Highline. Few people have done more for education than Gates. He really does care for Washington State's children. Hedestroyed him.

Posted by SeMe | October 24, 2006 9:33 AM
6

Nice post, Erica. As the spokesman for the No on 920 coalition (and a former Stranger colleague), I appreciate your covering this.
Two points about Blethen's claim that the estate tax will force him to sell his family-owned newspaper. First, he is the fourth-generation Blethen to control the paper, which means that there have been three inter-generational transfers of the Seattle Times Company, apparently without difficulty, all while we have had an estate tax in place in Washington State (we have had a state estate tax here since 1901, actually predating the federal estate tax, which was established in 1916).
Second, there is one other major family-owned newspaper in Washington State: the Spokane Spokesman-Review. And despite the fact that they are in no way, shape, or form a liberal rag, they endorsed No on 920 last week. Clearly the Cowles family, which owns the paper, would not have done so if their analysis of the issue had shown that Washington's modest estate tax (even those multimillionaires that do pay, owe only 4.5 percent of overall estate value on average) threatened their control of the paper. In other words, Frank Blethen is blowing a lot of smoke on this issue in his obsessive quest to win his family a needless tax break -- despite the fact that if 920 passes it will mean either raising property or sales taxes on ordinary middle and working class families that already pay way more than their share of the tax burden, or making serious cuts to critical, voter-mandated education programs that reduce class sizes in our schools, and that provide financial aid for thousands of young people who might not be able to afford a college education otherwise.

Posted by Sandeep Kaushik | October 24, 2006 9:39 AM
7

What, so no more Microserf jokes?

Or is that dialectic healthy for the evolution of progressive business?

Or should we from now on be reminded to feel a trace a deep sincere guilt whenever we poke fun?

Gates is cool, Blethen's cool.

IT'S ALL GOOD; at least that's what people are saying.

Posted by Unreal | October 24, 2006 9:57 AM
8

Here's the only thing you need to know about the estate tax repeal: The lost revenue isn't going to mean reduced services, merely that other people are going to have to pay the bill. And those other people are us.

If this tax were truly so onerous, we would haven't the Aladhoffs, Benaroyas, Boeings, Blethens, Boeings, Gates, Nordstroms, Rhodes, Skinners, Weyerhousers (sp?), and on and on and on.

It's the most pointless kind of greed because, as the Egyptians found out thousands of years ago, you can't take it with you.

Posted by Catalina vel-duray | October 24, 2006 9:59 AM
9

Can we draft Bill Sr. to run for something?

Posted by Gal Pal | October 24, 2006 10:07 AM
10

Sandeep, you did a good job yesterday, too. I was amazed that your counterpart seemed to be arguing that the worst part about the estate tax was that tax planning is too onerous a burden for businesses.

also, i loved the fact that blethen kept calling it the death tax.

Posted by Ginger | October 24, 2006 10:12 AM
11

They also like to present it as if families over the cutoff lose everything: "we'll have to sell the business!" When in fact the estate tax is not particularly onerous; they don't take everything over the cutoff, they just start taking a small slice. These people are still EXTREMELY WELL OFF after the tax is paid.

Posted by Fnarf | October 24, 2006 10:21 AM
12

I've seen Gates Sr speak at several charity events. He's getting pretty damned old, and he's a bit slow these days, but even in a half doddering condition he can talk circles around Blethen. I listened to that debate, and I just wanted to reach through the speakers and choke that greedy fucker. You'll never draft Gates Sr to run for anything at this point. He is in the enviable position of having all the money he could ever want, and a son even richer than himself, so he can just sit around giving it all away to causes he believes in. I have enormous respect for him.

Posted by SDA in SEA | October 24, 2006 10:22 AM
13

While neither Bill Sr or Junior are saints, you can credit their good impulses to Mary Gates - wife to Senior and Mother to Junior. I've said it before, and I'll say it again - she was a wonderful woman who left us too soon.

Posted by catalina vel-duray | October 24, 2006 10:32 AM
14

Blethen's position mirrors the general sentiment in this country. Everyone wants more money spent on education, everyone wants more government services, but no one want to pay for it. I guess it's hard to expect different from a country of debtors.

Posted by keshmeshi | October 24, 2006 12:51 PM
15

Meanwhile my paycheck this week is $5.66 smaller due to "medical wage diversions". Thanks Frank.

Posted by DOUG. | October 24, 2006 2:02 PM
16

I listened to the "debate" in my car and was so pissed by Blethen's outrageous bullshit I nearly drove into a tree. When he threatened that he and his family would leave, I was shouting "GOOD! GET THE FUCK OUT AND DON'T COME BACK!" Gates kicked his ass all over the air.

Posted by Bill | October 24, 2006 3:19 PM
17

He's ALWAYS threatening to leave. Why does he think we would even care?

I mean really - if he were to shut down the Seattle Times, he would lose money, but we'd still have the P-I, which Hearst would proably pump money into.

If he were to sell it, we would still have the Times, just with a different publisher, which could only be an improvement.

So Frank, if you are reading this, go ahead. Wave your little hand and whisper So Long, Dearie! You've earned your retirement. Go someplace warm and dry.

Posted by Catalina Vel-DuRay | October 24, 2006 4:58 PM
18

Hey, Fnarf!

I work at the P-I and you CAN get a Monday-Friday P-I-only subscription. It's listed in the rate box on our page A2 every day. Costs $2.90 a week. If someone in customer service at the Times told you you couldn't get this type of subscription they were WRONG.

FYI: The Sunday paper is technically a joint publication of both the Times and P-I. So, buying it actually benefits both papers.

Posted by P-I Guy | October 24, 2006 8:43 PM

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