Flash Fact: Breathing your last in Oregon can be costly

Oregon Transformation thb Flash Fact: Breathing your last in Oregon can be costly

Oregon Transformation

The federal death tax rate in this country is currently 35%.  There are 22 states that impose an additional tax on top of the federal rate with a state death tax, including Oregon.

So, for the folks who qualify for this death tax, what is the tax penalty for dying in the state of Oregon?  Nearly half of a lifetime’s savings.

This table shows combined federal and state death tax rates, according to the Wall Street Journal, for all 22 states:

State (w/rank) Rate % State (w/rank) Rate %
1 New Jersey 54.1 6 Kentucky 45.4
2 Maryland 50.9 6 Illinois 45.4
3 Indiana 48 6 Hawaii 45.4
4 Washington 47.4 6 Minnesota 45.4
5 Nebraska 46.7 6 Massachusetts 45.4
6 Delaware 45.4 6 Maine 45.4
6 Oregon 45.4 7 Iowa 44.8
6 North Carolina 45.4 7 Pennsylvania 44.8
6 New York 45.4 8 Connecticut 42.8
6 Rhode Island 45.4 9 Tennessee 41.2
6 Vermont 45.4 10 Ohio 39.6

 

Oregon has the sixth highest combined death tax rate in the country.

Why is this significant?  A 2008 study by the Connecticut Department of Revenue Services found that:
“… the states without an estate [death] tax produced twice as many jobs from 2004-07 and had a growth rate 50% faster than those with estate taxes.”

The “folks” that qualify for the death tax penalty in Oregon are mostly family business owners, ranchers, farmers and retirees.

It’s nearly impossible for a family business, family farm or ranch to survive for the next generation when the tax collector takes a 45% cut.

The logical decision would be to move to a state that doesn’t have a death tax.  Those states are welcoming the businesses, the jobs, and the competitive advantage.

Sources: http://online.wsj.com/article/SB10001424052748703960804576120050963075390.html

Learn more by visiting the Oregon Transformation website

 

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Posted by at 05:00 | Posted in Taxes | 9 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Certified

    Oregon needs this valuable revenue. Look at our standing in new job creation. We are doing just fine, thank you very much!

    • http://www.facebook.com/profile.php?id=529301921 Frank Martin

      “Oregon needs this valuable revenue”

      Oregon takes much of a persons earnings as they can get away with.. and
      now your just saying that if a person dies.. The State NEEDs the
      earnings and is entitled to nearly half what a person leaves behinds to
      his heirs?  We are told by politicians and others to “Save” for
      retirement… I guess by your definition.. that nudging by people to get others to save is for the State and not the individuals themselves..

  • http://twitter.com/jonesrich Rich Jones

    Way to imply causality with no actual data.

    Anyone who loses a family farm or business b/c of the ‘death tax’ did absolutely NO planning for his/her estate. Why is that Oregon’s fault?

    To be clear: there are ways to mitigate tax burdens at the time of death. But you have to actually think and do something first. The notion that a ‘death tax’ affects more than 2% of Oregonians is just wrong. The notion that it has hampered job creation is hysterical…

    Yes, take your farm to some other state. Perhaps Washington (oops, not Washington). BTW, 22/50 states apply a state tax on the estate, and Oregon’s rate is the same as 11 other states’. 12 of the 22 use the Oregon rate. OUTRAGEOUS.

    • 3H

      LOL.. good point.  They could have just as easily said we were 17th.   But, hey, it’s Oregon Catalyst.  

      When someone moves their farm to another state …   do they leave a big hole in the ground?

  • HBguy

    Of course another way of looking at it is that there are ten rates and Oregons rate is the fourth lowest in the entire USA.

    I believe whoever wrote this understands the inheritence tax system better than this article lets on. 

    A couple of the more entertaining claims:

    “The folks that qualify for the …tax… in Oregon are mostly family business owners, ranchers, farmers and retirees.” Who else is left? That pretty much covers 98% of the people who pass away.

     “it is nearly impossible for a family business farm or ranch to survive to the next generation when the tax collector takes a 45% cut.” First off, that tax rate doesn’t apply to the entire estate, just the part above the unified credit. Which for the 35% federal rate is 5 million. And if you have a decent attorney, it is really 10 million. So there is no tax for most small business owners, ranchers and family farms. Oregon’s 8% rate does kick in at 1 million (2 million for husband and wife). Secondly, if there is an estate tax due, the IRS will let you pay if off over 10 years. Now, if there is a family businese worth more than 10 million. I assume it throws off some substantial income. So, if there is a 12 million dollar family business, then the feds tax is, perhaps, $700,000. Paid over 10 years is 70,000/year (this is much simplified of course, but you get the drift). I assume a 12 million dollar business can throw off an extra 70,000/year. It’s not chickenfeed by any stretch, but think of the tax advantages the beneficiaries get with the step up in tax basis.

    Which leads me to my last point. The step up in tax basis. for those who don’t know waht that means, you need to find out. For those who do, let me ask if you’d prefer to give up the step up in tax basis for your assets, or have a 5 milion dollar estate tax credit.?

  • valley person

    What would rich people do without Catalyst out there to defend them, the poor dears?

  • surefoot

    This is just another phony story; I have a reliable source that all rich people shortly after death are happy to pay taxes on their estates despite what they said before their deaths. I’ve got a sneaky suspicion that after death the dead realize that they are not the ones who pay the tax but the heirs do, so stop calling it a death tax morons. As for the rich kids, let them go out and earn their own money after daddy dies, or they can go down to the park and drink beers with the bums if they want and beg for hand outs.

  • Founding Fathers

    “The federal death tax rate in this country is currently 35%.”

    Wrong.

    The federal estate tax rate is 35% for amounts over $5 million. If your estate is worth $10 million, your effective tax rate is 17.5%. If your estate is worth $50 million, your effective tax rate is 31.5%. If your estate is worth $6 million, your effective tax rate is 5.8%. If your estate is worth $5 million or less, your effective tax rate is 0%.

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