(The Center Square) – A bill “making the estate tax more progressive” in Washington state received a public hearing Tuesday in the House Finance Committee.
House Bill 2019 is sponsored by Rep. Chipalo Street, D-Seattle.
Republicans on the committee supported part of HB 2019 – that is, the increase in the state estate tax exclusion amount to $3 million for decedents dying on or after Jan. 1, 2025.
However, Republicans took issue with other elements of the legislation, including an update to the Consumer Price Index to allow for annual inflation adjustments to the exclusion amount and an increase in the tax rates for taxable estates of decedents dying on or after Jan. 1, 2025.
Washington does not have an inheritance tax but does have an estate tax, which critics refer to as a “death tax.”
According to the bill digest, “an inheritance tax is a tax on the beneficiaries of an estate whereas an estate tax is a tax on the decedent’s estate. If you are a person living in Washington who inherits property or money, you do not owe Washington taxes on your inheritance. The estate tax is a tax on the right to transfer property at the time of death. A person residing in Washington or a non-resident who owns property in Washington may owe an estate tax depending on the value of their estate.”
Street told committee members that he’s been studying the estate tax for the last couple of years.
“One of the things I enjoy about being on this committee is the opportunity to move our state toward more progressive taxation,” he explained. “It’s one of the places where we can change our tax code so that those of us who have more can contribute to our state services in a proportional amount as to those of us who have less.”
Fellow committee member Rep. Cyndy Jacobsen, R-Puyallup, did not share Street’s optimistic appraisal of HB 2019.
“I keep thinking about the song … ‘Tax Man’ and the Rolling Stones and The Beatles leaving the U.K. when they thought taxes were too high,” she told Street. “I mean people who have wealth have a great deal of mobility. Are you concerned about that in any way?”
He replied, “I think if we make sure that the revenue that we raise is contributed back to services that they care about, then I think that they won’t leave.”
After the hearing, Jacobsen spoke with The Center Square about her concerns.
“The very wealthy have proven that they are ready and able to move somewhere else,” she reiterated. “People that are wealthy have a choice of where they want to live. Folks who have means can make choices to live wherever they would like.”
Taking the estate tax from 16% to 38%, according to Jacobsen, will hurt family business owners.
“If you’re going to build a business and you’ve got a generational mindset, you’re going to want to build in a state where you can pass that business onto your children and this impedes that,” she said.
Frank Willmann of Bainbridge Island testified against the bill.
“Washington already has the nation’s most punitive estate tax,” he said. “Gov. Ferguson has provided guidance for no new taxes and this bill nearly doubles the estate tax. This will compel people to move.”
During the GOP media availability Tuesday, Minority Leader John Braun, R-Centralia, told The Center Square he has major concerns about HB 2019.
“The bill takes what is one of the most outrageous death taxes in the country and makes it worse, which is hard to imagine, so on balance it’s a bad bill and not fixing what is a real problem in our state,” he said.