Initiative 920 kills a fair tax that few pay
A couple of months ago I decided to speak out in opposition to Initiative 920, which seeks to eliminate Washington’s modest, long-standing tax on the transfer of multimillion-dollar estates. I joined Bill Gates Sr. and other folks from around the state in signing the No on 920 statement in the Voter’s Guide. I did not do so lightly.
I had some important questions I wanted answered first. Most important to me — as an orchardist with deep roots in this community — was what impact this tax has on family farms. I had heard a lot of claims from the pro-repeal side that estate taxes hurt family farmers. When I checked, it turned out that they were blowing smoke. Family farms are exempt from the tax: land, buildings, equipment, everything.
I wanted to know what impact this tax has on small business, because the “yes” side was saying that it drives family businesses under. But when I checked, I found out that out of 460,000 tax-paying businesses in Washington state, only 35 a year owe any estate tax, and in 27 of those cases the owners had at least $1 million independent of the business with which to pay any tax bill. I also found out that in those rare cases where owners might have trouble paying their tax bill — a situation that arises less than 10 times a year — owners are given 15 years to pay their bill.
By now, I was getting curious about this tax. I was determined to separate the fact from the fiction. I wanted to find out exactly who paid this tax, and how much they paid, and who benefited, and what they got out of it.
I learned that more than 99.5 percent of people in this state will never pay a cent in state estate tax, because the first $2 million for individuals (or $4 million for couples) is passed on tax-free. In other words, I found out that fewer than 250 multimillionaires (out of 47,000 estates each year) paid this tax, and those that did pay a reasonable amount: less than 5 percent of estate value on average.
I found that this was not an example of double taxation, because there is no income or capital gains tax in Washington. Most of the wealth in these multimillion-dollar estates had not been taxed before. The truth is, because of the way our tax code is set up, the wealthy are able to avoid paying their fair share while ordinary middle-class families pay too much.
I learned that if I-920 passes, that fundamental unfairness will get even worse. We will lose our only truly fair and progressive tax, which falls only on those who can afford it, and will likely have to make up the lost revenue by increasing taxes on the rest of us.
That is because the $100 million it raises is dedicated to funding critical public education improvements across the state. The money goes into the Education Legacy Trust, which pays for 7,900 higher education slots, as well as for financial aid for deserving students who might not otherwise be able to afford a college education. Most important of all, it funds I-728, which reduces class sizes in our overburdened schools, and it pays for learning assistance for academically struggling kids.
That education funding is particularly important in Central Washington, where education experts say our state’s education system is under the greatest stress. Our community and technical colleges in the Wenatchee area will alone receive more than $1.3 million in biennial funding for more enrollments, adult continuing education and other improvements because of the Education Legacy Trust.
In the final analysis, I learned that I-920 is an ill-conceived initiative that is opposed by a broad coalition of groups and individuals, including the League of Women Voters and the League of Education Voters.
They understand that if I-920 passes, it will shift the tax burden off of those who already enjoy every advantage onto those who already pay too much. And it would undermine our already stressed educational system. That is just plain wrong.
In the end, I signed the statement. Now please join me in voting No on 920.
John Senseney is a third-generation orchardist in Wenatchee.