Talking Points

• The estate tax is NOT a death tax � only the wealthy pay it. United for a Fair Economy and the Washington Tax Fairness Coalition think estates of $1 million or more should pay the tax; the Governor wants to tax Washington estates leaving more than $2 million. 
• The tax does not cause family farms and businesses to close.  Only about 2% of Washington estates paid the tax in 2002, or around 1,000 estates of the 44,000 people who died in the state that year. About 3% of the 1,000 had a majority of their estate made up of a small farm or business.
• More than half of the large estates that pay the majority of the tax (estates more than $5 million) are made up of appreciated assets (stocks and real estate) that have never paid capital gains taxes.  Upon death the capital gains on these assets is forgiven, a "death subsidy".  The estate tax is a means to capturing some of this heretofore-untaxed income.
• Legislating an estate tax is not adding a new tax, but providing a technical fix to a tax that the state already had, which legislators have fought to protect in the past.
• The estate tax is the most progressive way available to raise revenue the state desperately needs to meet its commitments.  If we lose this tax, any other way we raise revenue will be more regressive, placing a higher burden on lower income families. We are facing a $1.6 billion shortfall this year and because of the structural problems with our state�s tax system, it will continue to get worse.
• The estate tax was begun in the 1920�s in order to prevent hereditary aristocracies, and was based on the belief that the wealthy benefit most from sound economic, judicial, educational, and transportation systems.  The estate tax is a fair payback for the infrastructure the wealthy use to build their wealth.

Background Information

The Washington Supreme Court threw out the state estate tax last month on technical grounds, resulting in a loss of $270 million in the current budget cycle. Governor Gregoire has proposed reinstating the estate tax in her budget.  Her proposal calls for an exemption level of $2 million before the tax takes effect, and a complete exemption for family farms.