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The Honolulu Advertiser
Posted on: Friday, June 15, 2001

Editorial
State should retain taxation of estates

You can argue at length about whether the federal tax cuts President Bush signed into law last week will end up boosting the economy — or the deficit. But it's clear that part of that tax-cut package — the phase-out of the estate tax — will contribute enormously to the growing gap between the very rich and the rest of us.

And it will do virtually nothing for the rest of us. A careful look at the campaign mounted by Republicans against what they style the "death tax" played on fears of aging members of the middle class by threatening them with loss of mom-and-pop stores, condos and farms. The threat was bogus; only 2 percent of American households — the richest of the rich — were paying anything at all to estate taxes.

The estate tax arguably has been the most progressive tax in the nation. And it can and should continue to be a progressive tax here in Hawai'i.

State law requires many state taxes to mirror their federal counterparts. Unless state lawmakers intervene to preserve the state's estate tax, it will phase out along with the federal tax.

It shouldn't be that way. In no way does the estate tax "tax death," as Republicans suggest. It taxes wealth that mostly has never been taxed in any way, accumulated by the richest among us.

There may be a need for some refinement of this tax, if indeed it would cause unfair harm to the archetypical "mom 'n pop" store. But overall, Hawai'i should keep this tax.