Estate Taxes

In my opinion, estate taxes are an unfair and destructive double taxation on accumulated wealth. Twenty eight other states have no estate or inheritance tax and several other states are working toward eliminating them as well.

Conversely, the Oregon estate tax is well on its way to being changed in precisely the wrong way. House Bill 2541 proposes to increase the maximum estate tax rate to nearly 20%. It has passed the House on a 35-24 vote and is currently being worked in the Senate Committee on Finance and Revenue.

This bill would increase the threshold estate tax exemption from $1 million to $1.5 million, allowing many small businesses to entirely avoid Oregon’s death tax. However, the estate tax rate increases rapidly following that exemption reaching nearly $1.25 million on an estate valued at $8 million. For instance, the proposed new rates would tax a $3.5 million estate more than $440 thousand and a $7.5 million estate more than $1 million.

Many small family businesses and family farms meet that value threshold and would endure tax rates that would prevent them from remaining financially viable following the death of the principle owner. Estate taxes are due soon after death. Without significant and expensive financial planning the confiscatory taxes create a crushing financial obligation on grieving families.

In most cases the only options for paying these draconian taxes would be to borrow the money using the business assets as collateral or to sell a portion of the property to create the cash flow to pay the taxes. Too often neither choice is a viable option resulting in family businesses being liquidated to pay the tax. The near certain result is that multigenerational businesses, and the jobs that go with them, are lost to our communities.

It is Oregon’s small businesses that create most of our new jobs. The last thing we need is to levy another destructive tax on our small business communities.

Once again, twenty eight states levy no estate or inheritance tax. Repeated polling suggests that as many as two thirds of likely Oregon voters consider death taxes unfair and support complete and permanent repeal of estate taxes.

It would seem that our legislators would learn from their previous failed efforts to raise revenue through levying unfair taxes. Neither the highest personal income tax rate in the nation, nor one of the highest capital gains rates in the nation, nor the ridiculous tax on corporate gross earnings have raised anywhere near the predicted revenue. Businesses and capital are mobile and do move to the most profitable environments. Many Oregonians have learned to avoid oppressive and unfair taxation by moving their businesses and their wealth out of the state.

Moreover, investment capital from outside Oregon has been reduced to a mere trickle. Investors study both current taxes and exit strategies for recovering their capital and profits before investing. In Oregon they find oppressively high personal and corporate taxation for their current business operations. Further, they find oppressive capital gains and estate taxes blocking profitable capital exit from the state. The dearth of inflowing capital suggests that the investors are finding more favorable business investment climates in other states.

I believe that your Legislature should not be considering increasing these confiscatory estate taxes. Rather, we should be focused on eliminating barriers to business growth, capital investment and job creation. We should be focusing on repealing the recent unfair and unproductive marginal tax increases. We should be working to eliminate Oregon estate taxes and making significant reductions in capital gains rates.

I believe that the answer to our economic malaise is private sector jobs. Those jobs will only result from a favorable economic environment for the current and future businesses that will create those
jobs.

Please remember , that if we do not stand up for rural Oregon ... no one will.

Best regards,

Doug