Estate Tax battle in Washington State

Friday, October 13, 2006
==Newspaper owners fund plan to kill estate tax==
Donations just family business, owners say
By AMY ROLPH
P-I REPORTER
An initiative aiming to repeal Washington's estate tax is tugging at the heartstrings -- not to mention the purse strings -- of some of the state's most prominent business owners, including several family-owned newspaper companies.
 	
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Coalitions on both sides of Initiative 920 have collectively raised well over $2 million, but the most controversial donations have come from The Wenatchee World, Pioneer Newspapers, The (Vancouver) Columbian and The Seattle Times.
The papers' involvement in the campaign has raised eyebrows, with critics saying the publications can't be objective in their coverage if owners and publishers get involved in political campaigns.
Others complain that the papers aren't doing enough to let readers know of their contributions.
"This list is getting pretty long," said Sandeep Kaushik, spokesman for the No on 920 coalition, after The Wenatchee World earlier this week became the fourth paper to disclose financial donations. "These papers have made a completely inadequate effort to inform their readers."
The initiative is an attempt to undo the estate tax -- opponents call it the "death tax" -- enacted by the Legislature last year, which makes it possible for the government to tax large estates, though the first $2 million in value is exempt. Also, the heirs of farmers are allowed to exempt the value of all the farmland and farm equipment.
The Wenatchee World and Pioneer Newspapers have each given donations of $25,000 to a yes-on-I 920 coalition. The Columbian donated $5,000, and Jill Mackie, vice president of public affairs for The Seattle Times, made an in-kind donation totaling $1,000, which she said was for providing consultation to the campaign.
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David Lord, the president of Pioneer Newspapers, said he doesn't believe his company's donation affects its newsrooms.
"Hopefully we have enough of a reservoir of credibility that people will understand that there's a difference between news coverage and (the company's) opinion," Lord said.
Pioneer owns the Skagit Valley Herald and the Ellensburg Daily Record, as well as other papers in Washington and throughout the Northwest.
Rufus Woods, the publisher of the family-owned Wenatchee World, said this is the first time he has written a large check to a political campaign, but abolishing the estate tax is a personal passion of his family's.
"The estate tax is a lousy way to fund education," said Woods, referring to the Education Legacy Trust Account. All revenue from the tax goes to that account. "If it's a central responsibility of the state to fund education, why rely on a few people to do that?"
But it's the basic principle of objectivity that worries Kaushik, who canceled a meeting with the editorial board at The Wenatchee World because he didn't see the point of going. He said he also decided to forgo a meeting with The Seattle Times for the same reason.
Though some newspapers have addressed the issue of their donations through blogs and columns, Kaushik thinks they should do more to disclose their "hidden interests," right down to accompanying editorials with a note.
"There is a serious issue there of journalistic credibility," said Kaushik, who used to be a reporter for The Stranger, an alternative news weekly in Seattle.
But those who are on the receiving end of the donations don't see a problem.
"The bottom line is, these are family-owned businesses, and they have a stake in the matter," said Amber Carter, a spokeswoman for Yes on 920: Keeping Washington Family Business Alive, which is one of two I-920 coalitions.
Carter pointed out that other companies, such as Sabey Corp. and Oak Harbor Freight Lines, have also made large donations to her coalition.
Newspapers taking a stance on the estate tax is nothing new, said Chuck Collins, the co-founder of the Boston organization United for a Fair Economy and the co-author with Bill Gates Sr. of the book "Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes."
The Seattle Times, owned by the Seattle-area based Blethen family with the McClatchy Co. holding a minority stake, has a history of battling for estate tax repeal at the federal level, Collins said. The paper's publisher, Frank Blethen, organized newspapers to print free advertisements condemning the tax in the late 1990s, in addition to more traditional lobbying methods.
"There's a few people in the history of any cause or movement that you could look at and say they were totally believers, totally committed to a cause," Collins said. "He just put enormous creativity and talent into trying to get rid of the estate tax federally."
Mackie said the in-kind donations she made have been a direct result of the paper's history of battling the tax.
"We have considerable expertise on the issue," she said. "When this turned up on the ballot, people called and asked for our knowledge. A lot of the input I've provided has to do with fact clarification."
Blethen has taken stances on other political issues in the past, Mackie said, and he tries to act with transparency. Though he is not involved in putting the newspaper out every day, reporters and editors in The Times' newsroom have expressed concerns, she said.
"They're concerned about the appearance," she said. "It's a legitimate concern and one that Frank is very sensitive to."
Scott Campbell, publisher of The Columbian, a family-owned newspaper in Vancouver, said he received a phone call from Blethen urging his involvement in helping pass I-920.
It didn't take much urging; Campbell says he objects to estate taxes for several reasons, including the concern that it could severely affect a family-owned business' ability to survive from one generation to the next.
"I'm pro mom and pop, I like independent ownership, I've been convinced that the death tax is a barrier for a lot of families," Campbell said.
But Collins, who devoted several pages of his book to examining the way Blethen organized newspapers to combat the federal estate tax, and said the problem isn't that newspaper owners take stands on issues. What bothers him is that at times, they appear to be deceptive about their stake in the matter.
"I wouldn't have a problem if they disclosed their selfish interests behind it," he said. "It's a lot of power."
NOTABLE I-920 CASH DONATIONS
Coalitions on both sides of Initiative 920, a November ballot measure that would repeal the estate tax in Washington, have raised more than $2 million.
To the Committee to Abolish Washington State Estate Tax, a yes-on-920 coalition:
Martin Selig -- $839,825
John Nordstrom -- $75,000
Michael and Mary Hallman -- $35,000
George Suddock -- $30,000
Total named cash contributions raised: $1,206,300
To Yes on 920: Keeping Washington Family Business Alive:
Port Blakely Tree Farms -- $25,000
The Wenatchee World -- $25,000
Pioneer Newspaper Service -- $25,000
William Reed -- $25,000
Sabey Corp. -- $20,000
Total named cash contributions raised: $207,000
To the No on 920 coalition:
National Education Association -- $500,000
Bill Gates -- $160,000
Service Employees International Union -- $155,000
Washington Education Association -- $105,000
Bill Gates Sr. -- $15,000
Total named cash contributions raised: $993,250
Source: Washington Public Disclosure Commission
P-I reporter Amy Rolph can be reached at 206-448-8223 or amyrolph@seattlepi.com.