Washington legislators have introduced House Bill 3184, which if passed will double the state’s current estate tax rates. (The bottom bracket is now 10%, and it tops out at 19% on estates over $11 million). It’s a sensible way to help close the state’s budget gap — and one we’ve previously highlighted here in our Ax It or Tax It series. But there’s more to an estate tax than the revenue it brings in, as Warren Buffett has aptly observed:
“In a country that prides itself on equality of opportunity, it’s becoming anything but that as the gap between the super-rich and the middle class is widening.”
Mr. Buffet is not the only rich guy to have expressed public support for the estate tax. His sentiments are shared by the likes of George Soros, John Bogle, and Steven Rockefeller — all of whom would have top spots on any list of the world’s wealthiest people.
Surprised by their sincerity and selflessness? Perhaps you shouldn’t be.
These wealthy individuals appreciate the critical role the estate tax plays in financing the infrastructure that powers the U.S. economy.
Funds collected from the federal estate tax help educate and train our workforce, finance the research and development of new technology, ensure public safety, and maintain our roads and bridges. These public goods benefit everyone — but they are especially advantageous to the wealthiest entrepreneurs and investors, who earn extraordinary returns on those shared public investments.
The projects funded by the estate tax function as a massive subsidy to private business – creating the opportunity to build wealth and bolstering the ‘American Dream’. Without a strong infrastructure and educated workforce, many of our wealthiest citizens would never have realized such great success.
The estate tax also serves another, more noble purpose: it reinforces the uniquely American ethic of equal opportunity. That ideal, asserted by the Founding Fathers, is represented in our national philosophy of shared prosperity – from Social Security and universal basic education to property rights and our most cherished freedoms.
In Washington State, our estate tax revenue is dedicated to the Education Legacy Trust Fund, which helps to fund K-12 education and expands access to higher education for students throughout the state. It exempts the first $2 million of property entirely, and overall affects only about 200 estates per year – less than half of 1% of 45,000 annual deaths in Washington. The tax was recently upheld by voters in a landmark 2006 ballot measure. (Here’s a handy fact sheet that lays out some other important details about Washington’s estate tax.)
The estate tax is a simple, fair and robust way for the most successful in our society to ‘pay it forward’, and help ensure future generations have their own chance to strive to fulfill the American Dream.