As if living in Washington was not expensive enough, the state has an absurd policy that considers dying a taxable event. A preposterous system practiced only by 14 states. Under the name ‘#EstateTaxes’, residents with family estates are subjected to pay up to 20% on their property when it is bequeathed as an inheritance. This figure is the highest of any state in the entire country, and at the same time, the state’s tax exemption consistently ranks below the national average.

Although established to prevent wealth accumulation within select families and their businesses, it is clear that this policy has instead been impeding economic growth and suppressing the spirit of entrepreneurship. Of course, there is no excuse for wealthy business owners not to pay taxes, but imposing a death tax on top of the federal estate taxes they are already required to pay creates a discouraging environment for family-owned businesses to thrive.

Many businesses consider relocating to other states, like Arizona, where these taxes have been long repealed. In targeting the small amount of revenue generated this way, our policymakers cannot see the income the state loses when these businesses leave for a state with more supportive economic and entrepreneurial policies. Furthermore, levying estate taxes in such heavy proportions when these business owners have lost a loved one bears significant moral and ethical implications beyond the simple tyranny of economic metrics.

Even more astounding is that corporate businesses, which tend to be much larger than family-owned businesses, are completely exempt from death taxes, putting the much smaller family owned enterprises at an unfair disadvantage in a heavily tilted system serve only the wealthiest. This uneven playing field has led to many business owners selling or closing their companies before they die instead of expanding them or working to promote them for future generations. 

There have also been examples of business owners prematurely transferring their assets to their relatives in lower tax brackets, resulting in a loss of potential revenue and creating undue economic hassle for the business in question. On top of that, the high frequency at which death taxes force these transfers only leads to less business investment and interest, creating fewer jobs and ultimately taking a toll on the state economy. It isn’t hard to see how the situation is a lose-lose for all the stakeholders involved.

A poll has shown that 76% of adults want the death tax repealed, and more interestingly, it is equally supported by Democrats and Republicans. Death taxes were restricted in 1981 with support from 65% of voters until being reinstated in 2005 by a very narrow majority. No significant economic benefit has been reported since this reinstatement.

A compromise would be to elevate the threshold for exemption of estate taxes from $2 million to $3 Million. This would relieve 46% of the businesses from this burden while still allowing 94% of the total expected revenue to be collected.

I believe that the ultimate goal for our policymakers should be to repeal this tax altogether and create a fair economic environment for family-owned businesses to thrive. No death should be a taxable event. We genuinely need to kill this absurd death tax system.