House approves tax law changes

OLYMPIA – Lawmakers in the state House approved changes in state tax law Tuesday that would raise money to balance the budget.

The House voted to alter rules related to changes to the estate tax and phone taxes, responding to court rulings that threatened to limit the state’s ability to collect money in both areas. Representatives also voted to extend a fee on hospitals.

Combined, the changes may bring in hundreds of millions of dollars in revenue in the next budget cycle. The House is separately looking to extend some taxes and end some tax breaks to help balance the budget.

Democrats say some of the changes are a matter of fairness and needed to help add money to education. The state Supreme Court ruled last year that the estate tax did not apply to married couples who had used a certain estate planning tool prior to 2005.

Democratic Rep. Timm Ormsby says the measure was simply closing a loophole.

Some Republicans expressed concern because the estate tax change would hit some people retroactively.

“How is retroactivity fair?” said Rep. Matt Shea.

House lawmakers also targeted an exemption for landline phone service after a court ruling suggested the tax should also extend to cellphone providers.

The state Senate, led by a Republican-dominated coalition, approved the hospital fee in its budget but did not approve changes to the estate and phone taxes. Lawmakers between the House and Senate are entering final budget negotiations.