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Seattle Times Wants Estate Tax Reform, Draws Fire

Posted Monday, August 18, 2014 by John S. Palmer

A local political reporter is asking the Seattle Times to retract an editorial calling for estate tax reform, dubbing it “quite possibly the most dishonest Seattle Times editorial ever.”

The editorial, published August 14, claims the recent sale of 12.5 acres of farmland in Issaquah for development as single-family homes “is a reminder of one of the subtle ills of our tax system: a death tax that forces many farm families and business owners either to liquidate their assets, or go through enormous and costly gyrations to avoid it.” It goes on to state:

Washington state’s tax is especially punitive. The rate of up to 20 percent is the highest in the country — on top of a federal rate of 40 percent. The typical state exemption for the first $2 million of estate value is hardly enough for a farm or prosperous business, despite reforms by the 2013 Legislature…Washington might be a nice place to live, but if you are a business owner who wants to leave something for your heirs, it is a terrible place to die.

The editorial has generated some debate, but may be much ado about nothing, as I am not aware of any serious effort in the legislature to repeal or reform the estate tax. But it is somewhat amusing to watch political reporter/blogger David Goldstein take on the Times over this issue; in an August 16 post, he argued that the Issaquah farmland cited by the Times was apparently sold due to skyrocketing property taxes, not estate taxes. A couple of days later he called on the Times to retract the editorial. (And for those who are not easily offended, there is Goldstein’s initial expletive-laden response calling the editorial “incredibly dishonest” in part because “all working farmland is exempt from the WA estate tax.”)

While Goldstein makes some valid points, it should be noted that several critera must be met in order to qualify for the Washington estate tax’s farm deduction; for example, 50% or more of the estate’s adjusted value must be in agricultural real and personal property, which was being used for farming purposes at the time of the decedent’s death; the property must pass to a qualified heir; during the 8-year period ending on the decedent’s death, there must be periods aggregating 5 years or more during which the real property was owned by the decedent or a family member and used as a farm, with material participation in the farm’s operation by the decedent or a family member; and the qualified real property must make up 25% or more of the adjusted value of the decedent’s gross estate. As I previously noted, a similar exemption for family-owned businesses took effect on January 1.

Update, August 23: A couple of days ago, Times editorial page editor Kate Riley notified Goldstein via Twitter that the paper stands by the editorial; it should come as no surprise that this did not satisfy Goldstein, and he continues to snipe away at the paper over the issue.

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