No Taxes on Family Gifts

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Common Sense for Oregon

Picture this scenario: the year is 2017. Oregon’s economy has rebounded nicely from the Great Recession. More people are moving into the state, and more people – including business owners, farmers and families – are staying in the state. The unemployment rate is the lowest since the Great Depression. More money is entering the state’s coffers than ever before, as the new residents increase the money the state receives from income and property taxes.

This scenario would have been real today had the estate tax been abolished in Oregon in 2012 (the first time we approached the state with the idea). But this 2017 scenario is still a dream. Now the year is 2015, and there is good news: we still have time to move Oregon’s economy in a positive direction to make the 2017 dream become reality.

Oregon needs to start rewarding its residents – the ranchers, the farmers, the small business owners, the families – who already contribute money to the state in property and income taxes, among many other taxes, by stopping the double and triple taxation of the Oregon estate tax. We need to make sure no tax is imposed on any gift of property within a family.

It is generally agreed upon that Oregon’s economy was struck with a death blow by the Great Recession. And while the economy has been improving – ever so slightly – it is still not cured by the Great Recession. We believe the state continues to add another “death” blow to the Oregon economy by continuing the estate tax, also referred to as the “death” tax.

The estate tax is a tax imposed on your estate when you die. An estate includes cash, stocks, property, jewelry, etc. This is what is passed on to your spouse and family members. It is based on the value of the estate. You can think of it as a type of property tax that is imposed on your property when you die. Usually, there is a deduction level and the government imposes a tax on the value above the deduction. In Oregon, if all the property you leave at death $1 million or less your family does not have to pay a tax. But if the value of your estate is over $1 million your estate is going to have to pay a tax ranging from 10% to 16%.

Oregon’s total estate tax revenue in 2012 was $101.8 million which represented just 1.2% of the total state tax revenue. Economists projected that increased income taxes from new jobs created by eliminating the estate tax would offset the loss of estate taxes within five years. If the estate tax was eliminated in 2013, “44,500 new jobs would have been created. The personal income of state residents would be $2.4 billion higher.  The state income tax collection would exceed the average death taxes revenues.” (Fruits, Eric & Pozdena, Randall. Oregon’s Death Tax: An Impediment to Economic Growth, In-Migration, and Public Revenue). Today, the numbers remain relatively the same.

When new entrepreneurs see a tax-friendly state, they will be more willing to come to Oregon and create jobs. And economists still project that taxes imposed from the new jobs will more than make up the tax.

Many ranchers, farmers and family business owners find the value of their land, buildings, equipment and their own homes substantially exceed $1 million. So while the ranchers and farmers may be land rich, they are cash poor. These families are confronted to pay an Oregon estate tax every time a generation passes away.

We want to help all Oregonians – husbands, wives, domestic partners, great grandparents, grandparents, parents, children, grandchildren, great grandchildren, great uncles, great aunts, uncles, aunts, nephews, nieces, great nephews, great nieces, siblings, and cousins – to stay in our state. Each member of a family is important to our state and the health of our economy.  So if you are a family member, your support for our efforts is essential. We first need your signature to get our initiative on the ballot.

To sign our petition electronically please visit www.protectfamilygiving.org.

To help collect more signatures than your own, you can contact us by email at [email protected] or by phone at 503-480-0523.

You can also help fund our tax reform efforts.

To donate online, visit www.commonsensefororegon.org/give.

To donate by check, make checks payable to:

Common Sense for Oregon, Inc.
2007 State Street
Salem, Oregon 97301

All contributions are confidential and can be made personally or by businesses without limit.

Oregon does not need any more businesses closing up shop, jobs lost, or families hurting. Our state has suffered financially for far too long. Many states are finding new ways to keep businesses from leaving, including 35 states who have eliminated the estate tax. It’s time to make the scenario pictured above a reality here in Oregon.

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Posted by at 05:00 | Posted in State Taxes, Taxes | 7 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    I know practicing tax attorneys really like the estate tax, as it helps their business practices to work schemes on preserving post tax estate inheritance and avoid significant portions of Oregon’s estate tax. So, there is definitely some efficiency losses posed by the state estate tax albatross. Another words, there are more efficient tax systems than one including estate taxes.

  • bifford

    Great idea…but it’s another mankind scam

  • bifford

    Spell check issues…
    Great idea…but it’s another Mannix scam

  • HBguy

    Author. Please explain how you would treat tax basis. Does the step up in tax basis get eliminated? Does the tax basis get transferred along with the property? And isn’t it true that if you eliminate the step up in tax basis, then estates that are non taxable now will be taxable. And if you don’t eliminate it, then there will be a lot of profits for the wealthy that is never taxed even once?
    And, isn’t it true that the actual tax credit is 1 million per person, so with some simple estate planning the Oregon exemption is $2 million, or more if you have a good attorney.
    Thanks for about 10% of the story here. Take a look at the folks who are sponsoring this regressive tax proposal.

    • thevillageidiot

      the answer to your questions and fears is very simple. eliminate the estate tax. Then there is no argument about tax basis. there is no requirement of estate planning simple or otherwise. it would leave a lot of lawyers scrambling for some other business. and just exactly do you mean “profits for the wealthy that is never taxed even once?” If you mean the appreciation value of the property, the owner has been paying increasing property tax. This state double taxes enough. you pay Oregon state income tax on your federal tax. I think it is time to eliminate that as well. But then the dums would scream that only the evil wealth are benefiting when the reality is that everyone who pays federal tax and Oregon tax benefits. If the state taxed less maybe the all income earners would have more in their pocket to help the economy.

      • HBguy

        So would you eliminate the step up in tax basis as part of the proposal?
        I haven’t heard proponent of eliminating the estate tax ever answer that question. Which concerns me greatly.
        As far as income never taxed, i am talking about appreciated assets. Like stock or the value of a business, Which you do not pay property taxes on ever. So the profits from those assets would never be taxed even once if you kept the step up in tax basis.
        So…..does this author have a bill that we can read? I’m not against eliminating of modifying the estate tax in principle. Just don’t treat me like an idiot.

        • HBguy

          By the way, the answer is…..if you eliminate the estate tax and the step up in tax basis, the middle class estate which pays no taxes under current law will pay a lot of taxes. Under current law only 2% of all estates are taxed at all (That’s probated estates by the way, so doesn’t even take into account all the informal proceesses, so the real rate is much much less than 2%). .If you eliminate all step up in tax basis, I would bet nearly 90% plus of all heirs who don’t pay any taxes on inherited property now would end up paying taxes. However, the top 1% would pay much much less in tax.
          If wealth inequality is a problem that needs to be addressed – and many don’t believe it is – eliminating the estate tax is about the worst thing to do.

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