Don’t Die In Washington State – It Will Cost You!
One of our Nation's greatest sons, Benjamin Franklin, famously said "...in this world, nothing is certain except death and taxes,". It was said at the tail end of a statement regarding the recently passed U.S. Constitution in 1789, it was also the last great quote that Franklin would pen.
Death and Taxes?
Death and taxes...12 U.S. States currently have estate taxes, or more commonly referred to as death taxes. It's not enough that you get taxed on most things in life, but those 12 also tax you in death. An estate tax is not to be confused with the 5 that have an inheritance tax (one State, Maryland, has both).
What is the Difference Between an Estate Tax and Inheritance Tax?
It's pretty simple, the Estate Tax is levied on the assets of the person who died after all debts are paid while an Inheritance Tax is levied on what you, and others, as beneficiaries of the estate receive from the person who died. Estate Taxes usually kick in at a certain point. In Washington State the Estate Tax ranges between 10% and 20% and is levied on estates values at $2.193 million or more. That will change if some lawmakers in Olympia have their way.
House Bill 1795 Will Double The Estate Tax Rate
37th District Rep. Chipalo Street D- Seattle is the original sponsor of HB 1795 that would take the estate tax rate from between 10% and 20% to between 10% and 40% (by far the highest in the Nation) and would increase the exclusion amount from$2.193 million to $$2.659 million along with adding more taxable brackets. It also creates a new fund to benefit from the increased estate taxes.
Where does the Estate Tax Money go Now?
Currently revenue from the estate tax goes to the Education Legacy Trust Account (ELTA). A new fund would be created by HB 1795 called the Progressive Policy Account and any increased estate tax revenue would go into that fund. The money in that account may only be used to address intergenerational poverty, beginning with the
implementation of recommendations from the legislative-executive WorkFirst Poverty Reduction Oversight Task Force and the Homeownership Disparities Work Group.
The bill received it's first public hearing, appropriately enough, on Valentine's Day.