As support for the estate tax continues to flounder somewhat at the national level, the state of Washington recently demonstrated their support of the estate tax by approving on April 24 a new stand-alone estate tax that is expected to generate nearly $140 million of state revenue over the next two years. This move is especially significant because in February, the Washington State Supreme Court "threw out" the state's existing estate tax for various technical reasons, costing the state roughly $430 million in state revenues. However, in resistance to this, Governor Christine Gregoire (D-WA) included the estate tax in her budget proposal. State legislators rallied around her decision and passed the bill, which is now headed to the Governor for her signature. The Washington estate tax will apply to estates worth more than $1.5 million. In 2006, that level will rise to $2 million. An estimated 250 Washington estates will be subject to tax each year.

The Senate Finance Committe held a hearing yesterday on the issue of Social Security solvency and private accounts. Witnesses testifying before the committee included Peter Orszag from the Brookings Institution, Robert Pozen, whose Social Security plan has been praised by Bush, Joan Entmacher of the National Women's Law Center, Michael Tanner of Cato, and Peter Ferrara of the Free Enterprise Fund. Click here for witness testimonies. Committee Chairman Charles Grassley told reporters after the hearing that he wants to move forward with Social Security legislation. Republicans on the committee are planning to meet in two weeks to start coming with legislation that Grassley hopes will appeal to the Democrats on the committee, which include Senators Max Baucus (D-MT), Kent Conrad (D-ND), Jeff Bingaman (D-NM), John Kerry (D-MA), Blanche Lincoln (D-AR), and Ron Wyden (D-OR). While the Democratic senators seem to be united in their opposition to private accounts, Republicans are more splintered on the issue. During yesterday's hearing Craig Thomas (R-WY) questioned a move that would add trillions of dollars to our debt, and Olympia Snowe (R-ME) seemed opposed to personal investment accounts. She said, "Social Security became the bedrock of support for seniors in my state precisely because it's defined and guaranteed. What cost and what risk is it worth to erode the guaranteed benefit?" Click here and here for newspaper articles on the hearing as well as the Social Security rally that took place yesterday afternoon on Capitol Hill.

On tuesday, Finance Committee member Orrin Hatch (R-UT) said that both he and Sen. Charles Grassley (R-IA) had "pretty much told the president he's not going to get carve-outs" in regards to Social Security reform. Senate GOP leaders seem to be coming around to the fact that Bush's Social Security plan is not politically popular enough for them to seriously pursue. Hatch, in fact, is promoting a plan that would let people contribute up to $5,000 per year into a personal account, with the government providing scaled matching contributions for those who make less than $80,000 annually. Hatch's proposal also provides financial incentives that would be added to the accounts of those who opt to defer their receipt of Social Security retirement benefits. And the debate for reform continues. Of note: On April 26th, at 10 AM, the Senate Finance Committee will hold a hearing on sustainable solvency, during which they will look at proposals for reform both with and without private accounts. Robert Pozen, a former member of Bush's 2001 Social Security commission, will testify. His plan for reform has garnered a lot of attention over the past few months.

Federal Budget

• House Again Passes Irresponsible Estate Tax Repeal
• No Compromise Seen in Budget Negotiations
• Billions Lost Annually Due to Tax Evasion