The handmaiden of death is still taxes

In the narrow defeat of the death-tax and minimum-wage compromise in the Senate, good ideas fell along with the bad. The good ideas need to be revived, including a sharp reduction in tax on assets at death. Our state's senators, who voted no, need to work toward a version that will justify a yes.

Sen. Patty Murray has acknowledged that the death tax needs to be reformed, but she worries about the loss in federal revenue. Revenue is a real problem, but we believe the death tax is so destructive that it loses more revenue than it gains. Here is why: In 2011, the top rate will revert to 55 percent of assets. Even with deductions, on a successful family business, the tax will approach half the value.

To avoid that, business owners collectively spend billions on attorneys, trusts and otherwise unnecessary life insurance. From their point of view, this spending is a good investment, but from the view of their employees and their community, it is wasted. It might have been invested in their business, but instead is diverted into activities that produce nothing.

The death tax brings in about 1 percent of federal revenues. That's not much. Add up its perverse economic effects and the cost to collect it, and it destroys more revenue than it creates.

Many other advanced countries, including Canada, Australia and Sweden, have no death taxes. These are not low-tax countries: Sweden has the highest tax load in the world, which it can do only by making taxes as efficient as possible. It recently abolished its death tax.

Both of our senators have heard these facts many times. Yet, it is an election year. Sen. Maria Cantwell is under pressure from her party's left, which regards the death tax as a symbol of social concern. They like the idea of it, but they don't know what it does.

We do. The Seattle Times Company is one of the few remaining family businesses in an industry dominated by corporate chains — large public corporations that assembled themselves by buying properties often put up for sale because of the estate tax. We care about family business — ours and others'.

Readers sometimes chide us for speaking up about this, but we think most of them support us. We keep hoping that sometime soon, our senators will, also.