TODAY -- if members of the D.C. Council have any sense of responsibility for reasonable tax policies -- they will vote to overturn their own reckless acceptance earlier this month, without a public hearing, of Mayor Barry's soak-the-survivors tax plan. Otherwise, homeowners all across the city -- and any other residents with life insurance, pension benefits or belongings they hope to leave to their adult children someday -- are in for a financial shock.
"Estate tax" may sound as if it is something that only rich people have to worry about -- and why worry about rich people? says your glib politician. But under the bill passed by the council on June 2 and scheduled for reconsideration at a special meeting today, any widow or widower with a house, savings or other property totaling $50,000 to be left to adult children should join the ranks of the worried:
Assuming that insurance payable to those children makes up 10 percent of that taxable estate of $50,000, the District would snatch $3,000; the federal government, on the other hand, would take nothing, nor does Virginia. Maryland's inheritance and estate tax would total $450. For a similar estate of $150,000 -- which may be little more than a house that's been in a family long enough to be clear of mortgage payments -- the city would take away $12,500; again, neither ther federal government nor Virginia would take any tax on this estate, while Maryland's inheritance and estate tax bill would be $1,350.
There are other provisions that would cost these middle-income estates far more than does the current inheritance tax, including one that would apply the estate tax to the entire estate rather than to each portion as it is inherited, at the corresponding lower rate.
Simplifying the filing requirements and raising more money for the city are worthy objectives, but doing it by wiping out unduly large portions of what residents have put together to pass on to their children -- and without even holding a hearing on this year's legislation -- is totally irresponsible and shortsighted. Important tax changes should be enacted only after thorough, well-publicized hearings and thoughtful consideration; on this bill, only council member Betty Ann ykane opposed the slapdash way in which the bill was whistled through the council. Today, residents will find out who else on the council has taken a better look at a bad bill -- and recognizes that it should be pulled back and buried.