Schmudget Blog

Proposed ‘Supermajority’ Amendments Would Protect Latest Tax Loophole for the Wealthy

Posted by Andy Nicholas at Feb 07, 2013 06:15 PM |

In the wake of the State Supreme Court decision to allow wealthy married couples to avoid paying the estate tax on a legal technicality, at great cost to public schools, policymakers should be able to act responsibly and simply close the legal loophole. But thanks to the state law that requires a “supermajority” vote of the legislature to raise revenue, as few as 17 state Senators can block any attempt to rationally solve the problem.

It’s just the latest hurdle caused by the supermajority law, which has resulted in four years of legislative dysfunction and sluggish economic growth. Today, lawmakers are hearing three proposed measures – Senate Joint Resolutions 8200, 8204, and 8205 – which would permanently cement this job-killing law into the State Constitution. At a time when policymakers should be focusing all of their attention on getting more resources to our badly underfunded schools, these proposals are a destructive distraction.

The supermajority law bars policymakers from raising additional tax revenue without a two-thirds majority vote of the legislature or a public referendum. As we’ve written previously, the law, by allowing a small group of lawmakers to block legislation, effectively hands all state budget decisions over to a handful of people who are opposed to raising any additional revenue for any reason.

As a result, this minority of legislators (who represent a small portion of Washington state’s population), has forced the majority to accept round after round of debilitating cuts to vital investments in health care, education, and safe communities. These cuts have eliminated thousands of jobs and hampered Washington state’s economic recovery, taking an enormous toll on struggling Washingtonians from Yakima to Mount Vernon.

If that weren’t bad enough, a recent State Supreme Court decision created an enormous loophole in Washington state’s estate tax, a voter-approved tax that only impacts the heirs of the super-rich. Due to a legal technicality, the Court’s decision (known as the “Bracken decision”) allows wealthy married couples to completely avoid paying estate taxes and shirk their obligation to help support schools. (All revenue from the estate tax is dedicated to education.) The court decision is projected to cost Washington state  $160 million in the coming 2013-15 budget cycle, widening the already yawning gap between our needs and the resources we have to meet them.

Not surprisingly, the Washington State Department of Revenue has found that estate planners and lawyers are already developing strategies to help their ultra-rich clients take advantage of the Bracken loophole.

The supermajority has done enough damage to Washington state. Enshrining the law into the State Constitution would make it impossible for the majority to rebuild a state economy that benefits all Washingtonians.

Document Actions
HIGHLIGHTS

GiveBIG 2016 medium icon 

GiveBIG is May 3

Seattle's annual giving event is right around the corner. And for the first time this year, a group of our board members is giving a $4,000 challenge grant to inspire even more people to make a gift to the Budget & Policy Center! You can schedule your gift for #GiveBIG now. A gift to us is an investment in the progress and prosperity of Washington state.

Our Legislative Agenda

During the 2016 legislative session, the Budget & Policy Center promoted several of the common-sense policy ideas we developed for the 2015-2017 bienniumOur Legislative Agenda calls for an equitable, sustainable revenue system in addition to state investments that: promote a world-class education system; sustain a strong middle class; produce living-wage jobs, and ensure that all Washingtonians have equal opportunity to get ahead. 

Budget Beat 

Listen to our Budget Beat offering highlights of the 2016 legislative session! 

Testimonies in Olympia

We testified in support of a number of important bills during the 2016 legislative session. Take a look:

  • Policy Analyst Elena Hernandez's testimony (at the 23:23 minute mark) on the House Bill that would take a two-generation approach to preventing poverty 
  • Associate Director of Fiscal Policy Andy Nicholas's testimony (at the 1:54:09 mark) on the House bill focused on aerospace-related tax breaks
  • Research and Policy Director Lori Pfingst's House testimony (at the 9:25 mark) and Senate testimony (at the 1:44:54 mark) on the two-generation approach to poverty prevention bill 

Budget Matters Summit

Thank you to all who attended our our Budget Matters 2015 policy summit. If you missed it (or would like to relive it), you can watch a highlight video of the summit or watch the full summit panel -- which featured a range of community leaders talking about how to advance racial equity in state policymaking.