Repeal of estate tax would cut funds for Wash. public services, charities

For Immediate Release: October 16, 2003
Contact: Bob Keener, (617) 423-2148 x119

Two new reports:

Repeal of estate tax would cut funds available for public services, charities in Washington

“If Washington, D.C. thinks it can afford another tax cut for the wealthy by repealing the estate tax, we in Washington State have a better use for the money.”

– Mike Lowry, former Governor of Washington

Download studies:

The Estate Tax and Charitable Giving: State-by-State Analysis, OMB Watch (PDF, 216 KB)

Trillion $ Trade-Off: The Impact of Federal Estate Tax Repeal in Washington, National Priorities Project (PDF, 48 KB)

Source Notes and Methodology (PDF, 28 KB)

SEATTLE, October 16, 2003 – Just as Washington State is reeling from the latest round of state budget cuts, President Bush is proposing a new tax break for multi-millionaires that would cut funds available for health care, education, and police and fire protection, according to a new study. A separate study finds that estate tax repeal would also reduce gifts to charities in the state by $169 million per year.

According to the Congressional Budget Office, repeal of the federal estate tax would cause a loss of almost one trillion dollars from the federal Treasury over the next 20 years. A new analysis by the non-partisan research organization National Priorities Project illustrates how Washingtonians would benefit if their share of that trillion dollars was spent here instead.

“Our report shows that if this one trillion dollars were spent on the states instead of tax breaks for multi-millionaires, Washington’s share, based on population, would be $765 million annually. That’s over half of the recent state budget deficit,” said Anita Dancs, research director for the National Priorities Project. “Translated into local spending, this amount of funding could pay for 3,582 public school teachers, 3,811 firefighters, 38,506 scholarships for university students, and health coverage for 43,772 people every year for 20 years,” she said.

Bush’s plan to permanently repeal the estate tax would also remove a strong incentive for wealthy households to donate to charities, according to a new study by the independent research organization OMB Watch. The $169 million reduction in charitable gifts as a result of estate tax repeal would surpass the $156 million in total annual grants made in Washington by the Bill and Melinda Gates Foundation, or the total annual giving of the next-largest 39 foundations combined.

OMB Watch economist John Irons said, “Repeal of the estate tax would result in significant reduction of charitable giving to Washington charities, at a time when we are increasingly turning to charities to make up for public budget cuts. It would mean loss of jobs, services, and perhaps even whole institutions.”

Background on the Federal Estate Tax:

Under tax legislation passed in May of 2001, the amount of wealth exempted by the estate tax gradually rises until 2009 to $3.5 million for individuals and $7.0 million for couples.

In 2010, the estate tax is repealed for one year, at which time the law “sunsets” and reverts to its pre-2001 status. Proponents of repeal in Congress are pressing for “permanent repeal,” which would mean a loss of $982 billion in federal revenue over the next 20 years. Others advocate reforming the estate tax by raising wealth exemptions, but retaining the tax on large fortunes over $2 - 4 million, which would greatly reduce the loss in federal revenue and charitable gifts.

Despite the largest federal deficit in history, President Bush includes permanent repeal of the federal estate tax in his six-point economic plan. Senate Majority Leader Bill Frist has declared that repeal of the tax is a top priority in the U.S. Senate, and the U.S. House voted this past June to permanently repeal the estate tax.

Washington’s U.S. Senator Patty Murray voted for estate tax repeal in 2000 but has more recently opposed it. U.S. Senator Maria Cantwell has consistently voted against estate tax repeal.

“We can’t afford estate tax repeal,” said Mike Lowry, former Governor of Washington. “It would be the height of fiscal irresponsibility to slash federal revenue at a time of mounting deficits and mounting costs.”

Under current law, only 100 estates in Washington will be wealthy enough to pay the tax after exemptions are raised to their highest level in 2009.

“The children of the families we serve need a legacy too, the legacy of equal opportunity left to them by all the previous generations. If our children can get health care, day care, and quality education by reducing the inheritance of a few wealthy heirs, that seems like a good trade-off,” said Aiko Schaefer, director of the Statewide Poverty Action Network.

United for a Fair Economy (UFE) is a national nonpartisan non-profit organization, which raises awareness that concentrated wealth and power undermine the economy, corrupt democracy, deepen the racial divide, and tear communities apart. UFE’s Responsible Wealth project organized over 1,500 wealthy people to sign the Call to Preserve the Estate Tax, which helped delay estate tax repeal until 2010. See for more information.

National Priorities Project (NPP) is a non-profit community education and research organization that for 20 years has dedicated itself to making the nation's budget priorities something that ordinary citizens can understand and help shape. NPP offers citizens and community groups tools and resources to shape federal budget and policy priorities that promote social and economic justice. See for more information.

OMB Watch is a 501(c)(3) nonprofit organization located in Washington, DC, and was founded to promote government accountability and citizen participation. OMB Watch was formed in 1983 to lift the secrecy shrouding the White House Office of Management and Budget (OMB), and now more widely tracks the federal government's institutional responsiveness to public needs. See for more information.