Frank Blethen Gets His Way, Provided He Kicks the Bucket in 2010

Hilarious story in The New York Times this morning on the federal estate tax mess caused by Republicans back in the early days of the Bush administration. Republicans have opposed the so-called "death tax" for years, and tried to eliminate it during Bush's first term. The problem was, it caused a huge hole in the budget (this year, despite meddling, it will generate around $25 billion in tax revenue). So, they came up with a general phase-out that raised the limit to be subject to the tax year after year (in 2009, it's applicable to estates worth $3.5 million or more, at a rate of 45 percent).

Of course, that was all a dodge. Their real intent was to eventually just eliminate it. Then, the Democrats came back to power, leaving us in the hilariously stupid position we're in now: As of Jan. 1, there will be no federal estate tax. At all. Until Jan. 1, 2011, when the old tax goes back into effect at a rate of 55 percent.

But here's the kicker, as the New York Times explains it:

There is yet another wrinkle. When they scheduled the demise of the estate tax for 2009, the authors of the 2001 tax measure replaced it with a capital gains tax of 15 percent on inherited property that is later sold.

The threshold for being subject to those taxes is set lower, with the first $1.3 million in capital gains exempted for general heirs and $3 million for spouses. Democrats argue that thousands of estates that would not have been subject to taxes under the current law could get hit in 2010 even as those at the higher end of inheritance scale escape the 45 percent tax bite.

So, in effect, the Republicans' convoluted attempt to eliminate the estate tax--and the Democrats' failure to fix the situation--has made it far more broadly applicable, albeit at a lower rate. All of which leaves me wondering how Seattle Times owner Frank Blethen, a long-time opponent of the estate tax, is feeling right now.

In the past, Blethen has been accused (most notably in The Stranger, see below)of exerting pressure on the Times's editorial page to try to help get the tax eliminated. The Times's endorsement of Republican Mike McGavick over Sen. Maria Cantwell during her 2006 re-election bid was attributed primarily to her support of, and his opposition to, the federal estate tax, given that previous editorials put the paper squarely in Cantwell's camp. As Josh Feit noted in The Stranger at the time:

So, the Seattle Times endorsed McGavick over Cantwell because...?

How about greed? McGavick supports Seattle Times publisher Frank Blethen's pet cause: repealing the federal estate tax, which would affect just about 0.2 percent of Americans. Fourteen Washington families with estates valued at $10 million or above would benefit. The Blethens own 50.5 percent of the Seattle Times, estimated to be worth $900 million.

So, where does the current clusterfuck leave Frank Blethen? Well, if ever there was a time to pass on the old family business to his son Ryan--now the editorial page editor of The Seattle Times--2010 looks to be it.