Imagine this, you work your whole entire life to leave your children a better life than you began with. You hope on leaving a legacy for multiple generations to come, for them to build upon and bring economic viability to the surrounding community. However, when you die in order for your estate to be inherited by your heirs they must first pay a tax. A death tax.
As ridiculous as the above scenario sounds it is incredibly realistic. Every time the last member of a given generation passes away their heirs are forced to pay a TAX on the entire estate. In a sense this is a double tax because in the case of real property, like farmland, property taxes have been paid year after year on the land. If you have been making a living off the land then you’ve been subject to pay income taxes on it as well. This misguided tax affects property owners, small business owners, family farmers and anyone who has had a job or one day will hold a job.
For example, I am 5th generation farmer who is just beginning. The 2nd generation of farmer is still alive, my great-grandma, she still owns quite a bit of the land we farm today. When she passes away the land will be passed down to the next generation and when my grandparents die it’ll be passed down again. Each time the land, that is my family’s livelihood and legacy, is passed down the inheritor is forced to pay a tax.
There’s a saying that farmers are land rich and cash poor. The money we have “lying around” to pay this erroneous fee is tied up in other land, equipment and next year’s crop. To generate cash immediately we must either sell land or equipment or get out of the business of farming all together. Potentially one less family farmer to continue on for the next generation because the government taxed them out.
The way it is right now in Oregon any estate over a million dollars is subject to this estate tax. With value of farmland a million dollars is easily reached in land alone. However, when you start adding in the equipment and buildings used on the farm the amount you owe to the state & federal government starts increasing exponentially. Yes, I said state & federal, the state of Oregon has its own death tax separate from the federal death tax.
It doesn’t have to be this way. Right now, in Oregon, there are petitions circulating to put this issue on the November 2012 ballot and end Oregon’s Death Tax. Twenty-nine states have already repealed it and only 3 states west of the Mississippi still have this “double” tax Oregon, Washington & Hawaii.
Here’s what this measure will do if passed:
- It will phaseout the Oregon estate tax by reducing the existing tax by 25% in 2013, 50% in 2014, and 75% in 2015. As of January 1, 2016, the tax is zero.
- It phases out the capital gains tax on property sales within a family on the same schedule as the phase out of the death tax.
The revenue generated by the death tax is less than 1.5% of the general fund or roughly $90 million dollars a year. However, the good news is the “lost” revenue will be made up in five years! Professors Eric Fruits and Randall Pozdena issued a report in February of this year in which they predict that elimination of the death tax will lead to the creation of between 31,000 and 44,500 new jobs in Oregon over the next 5 years. This is because of increased in-migration of family owned business and reduced out-migration of such businesses. The tax revenues generated by these new jobs will gradually offset the loss of estate tax revenues.
Jobs & tax revenue? Sounds like a win-win to me.
I urge anyone registered to vote in the state of Oregon to go endoregondeathtax.com and print off an individual petition to sign and mail in. This is issue vital to the economic sustainability of our family owned & run businesses!
In full disclosure, I am one of the chief petitioner’s on the campaign because at 26 years old I am looking at my future as a farmer. I wonder if they’re will be anything left for me and my future generations if my family is continued to be subject to this death penalty.