OLYMPIA — Minutes before midnight, the Senate passed a change to the state's estate tax that supporters called a technical fix and opponents called an unconstitutional “reach back”.
After a day of negotiations and discussions about other bills that might be traded in exchange for a yes vote on the bill, the Senate voted 30-19 to allow the tax to be levied on certain trusts set up by married couples.
The law allows the estate to defer taxes when the first spouse dies, and pay them when the second spouse dies. The state Supreme Court ruled earlier this year the law was incorrectly written to cover some estates in which the first spouse died before the law passed in 2005. The ruling allows some couples to escape the estate tax, which a single person's estate would have to pay.
“It truly does close a loophole that was determined by the Supreme Court,” Sen. Andy Hill, R-Redmond, said. It also keeps the state from having to pay some $160 million in refunds over the next two years, which he said should be spent on education and end talk of raising taxes for the state's operating budget, which is still under negotiations.
Sen. Rodney Tom,D-Medina, said he voted against the estate tax in 2005 because he thinks it's a bad tax for a state to levy. But he voted for the fix because “it was very clear when we passed that the intent wasn't to tax couples and singles differently.”
But some Republicans argued that the bill wasn't a fix at all, but an invitation to another lawsuit, and another court loss.
“I don't think we'll ever see this money,” Sen. Mike Padden, R-Spokane Valley, said. “The Supreme Court will rule the retroactivity is unconstitutional.”
Before the Senate would vote on the estate tax, the Majority Coalition Caucus insisted that both it and the House pass reforms to the state's Model Toxics Control Act. After a day of negotiations, it passed that bill and sent it to the House, which passed that bill in a matter of minutes.
That action had some of the House's more conservative members, like Rep. Shelly Short, R-Addy, in rare agreement with some of its more liberal members, like Rep. Hans Dunshee, D-Snohomish. Short said the reforms would encourage faster cleanups of toxic sites.
Some members complained that it was a complicated bill that they hadn't had time to read. After a short debate, however, the toxics cleanup bill passed 67-18.