Guide to Initiative 920
Carl Gipson, Policy Analyst, October, 2006
In November, voters will again have the opportunity to repeal the Washington estate tax by voting on Initiative 920. The estate tax, sometimes called the “death tax,” has been a politically sensitive issue in the century since our state and the federal government imposed the first permanent estate taxes in the early 1900s.
There is often confusion between estate, inheritance and transfer taxes. An estate tax is a tax paid on the total value of a deceased person’s estate. An inheritance tax is a tax on assets a living person receives through inheritance. A transfer tax is a tax on transfers of money or other gifts between living people. Transfers to grandchildren or more distant relatives are subject to a generation-skipping transfer tax. Both Washington and the federal government have at one time or another imposed these taxes. Initiative 920 deals only with the estate tax.
While this report outlines the estate tax issue in Washington State, it is important to note that the U.S. Congress is also debating this issue. This report will touch briefly on the federal estate tax issue, but focus mainly on Initiative 920 and Washington’s estate tax debate. For decades, Washington’s estate tax was intrinsically linked with federal policy, and many of the core issues in the debate over the estate tax remain the same, whether applied to national or state proposals.