PolitiFact Portraying Its Opinion on Measure 84 as Facts

Right From the Start

In last week’s column I noted an article in the Wall Street Journal by L. Gordon Crovitz regarding the new use and abuse of “fact checkers” by the mainstream media. It was a “pox on both your houses” article which broadly condemned the use of “fact checker” opinions as if they were facts themselves. As Mr. Crovitz noted:

“The political season brings out the worst in many, but it’s still surprising that some journalists are reliving the good old days when the media claimed a monopoly on the truth.

* * *

“Reporting as ‘fact checking’ might have started as a check on outright falsehoods, but it has morphed into a technique for supposedly nonpartisan journalists to present opinion as ‘facts.’

It was like bugling for elk. The Oregonian’s Sunday edition contained a “PolitiFact” article relating to Measure 84 which will phase out Oregon’s “death tax.” The banner for PolitiFact in what is truly one of the most hypocritical and self-serving statements ever issued by the Oregonian carries the legend “Sorting out the truth in politics.”

The Oregonian article is lengthy and, to its credit, points out a Kevin Mannix error – that being that 31 states have repealed their estate/inheritance taxes since 2001. The fact of the matter is that 31 states have allowed their estate/inheritance taxes to expire since 2001. Quite frankly it is a distinction without a difference – unless of course you oppose elimination of the estate/inheritance and then you seize upon nuances as if they are major lies comparable to:

“I did not have sexual relations with that woman, Monica Lewinsky. I never told anybody to lie, not a single time; never.”

Oh, bad choice, the mainstream media dismissed that as much ado about nothing.

But then the Oregonian trots out its “opinion” disguised as “fact:”

“A key argument of the Yes on 84 campaign is that Oregon is at an economic disadvantage because of our estate tax. Saying that more than half of states got rid of their estate tax laws because they feared being at an economic disadvantage drives home the point that Oregon could be dumb for not doing the same.

But that wasn’t the stated reason for most of the states. They didn’t take a vote to repeal. The feds made the change. The states just let the provisions lapse.” (Emphasis supplied).

That, for those of you forced to endure an education in the Portland public schools, is an opinion not a fact.

First, the Oregonian could not possibly know what was in the collective minds of 31 different state legislatures. It is conjecture upon conjecture by the Oregonian and that, sports fans, is OPINION not FACT. It is just as likely that economic rivalry between the states played a large part in the decision as not.

Second, the intimation that the 31 states estate/inheritance tax laws merely lapsed without concurrence by the effected states is preposterous. Every one of those states has a legislative fiscal officer responsible for identifying events effecting revenues to the states and presenting the legislature alternatives as a result of those events. The states did not just “allow” the tax to lapse; they made a conscientious decision to eliminate the tax. No bill was required to be introduced, debated and passed – it would have been redundant. The alternative explanation is that the “big spenders” in those 31 states lacked the requisite number of votes to introduce, debate and pass an estate/inheritance tax bill. In either instance it was an intended act of the state legislatures and not merely a lapse. Suggesting otherwise is OPINION not FACT.

In the body of the PolitiFact article the writer states:

First of all, most of us will not die with enough money to have to pay this tax.”

That may be true for reporters at the Oregonian but it is not true for the thousands of small businesses that produce the jobs in Oregon – or the family farms that produce the food for our tables. Let’s try to apply some math to this instead of the base prejudices of another liberal reporter. In today’s main street marketplace a return on investment of six percent is considered healthy. (We are going to do this math with a more bullish number also just to quiet those who disassemble by nitpicking.) That means that a business that produces $240,000 annually for its owner (a figure below what President Obama has identified as representing “the rich”) has a market value of $4 million dollars. Upon the owners death – and leaving aside the value of other assets in the owners estates such as a home, automobiles, bank accounts and IRAs – the inheritance tax due on the excess over $1 Million would be in excess of $300,000. That is more than the business produces annually. It will force the heirs to that business to borrow that money to pay the taxes and will cripple the business in terms of financing for inventory, cash working capital, and expansion. Even if you assume a bullish twelve percent return on investment the market value of the business would be $2 Million and the tax would be in excess of $100,000 with the same results. In either instance it is a business crippler.

After acknowledging earlier in the article that the threshold for application of the tax is $1 Million, the writer suggests that only those with estates of $5 Million or more might actually make a decision to leave Oregon to avoid the estate tax:

“Sure, that makes intuitive sense. If Politifact Oregon had $5 Million and could choose where to die, we might opt for the state without an estate tax so we could leave more money to the baby PolitiFact. But we suspect there are many reasons that factor into where a person dies, even many financial reasons.”

It doesn’t take an accumulation of an estate in excess of $5 Million to trigger the decision to leave Oregon. The choice between paying $100,000 to the state of Oregon or leave it to your children is not difficult. You only have to run down a list of the past chairmen of the Portland Business Alliance to see where they land after retirement. And the very rich, while they cannot avoid the federal estate tax, can and do routinely avoid Oregon’s estate tax by choosing a residency other than Oregon.

The opponents to Measure 84 will be well funded and the public employee unions will provide a large share of that funding. They already characterize this as the Paris Hilton tax as if it only effects the rich. But the rich already move away and take their wealth with them. Oregon’s estate tax applies primarily to those who cannot move – the farmers and ranchers and the small business owners.

The Oregonian would have served the people of Oregon better if it would have investigated the impact on small businesses of the current estate/inheritance tax rather than ruminate about the intentions of various states in eliminating their estate/inheritance taxes. Particularly when the gist of their assertion is opinion – not fact.

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  • Judahlevi

    There have been many occasions, not just this one, where the Oregonian’s ‘Politi-faux’ has expressed merely opinion, not facts. And as has been stated here, political positions are almost always opinion, not facts. It is with extreme hubris that any journalist tries to convince the reading public that they alone know the “truth” about politics. There is very little truth in politics.

    • 3H

      But, the “facts” underpinning an opinion is fair game?

  • HBguy

    I don’t disagree that these self styled politifact and factchecker writers are pretty lame. They make too many mistakes and miscalls to give any of their analysis much credence. I don’t read them.

    And I though for once I was going to agree with this writer. Then he started doing some calculation to prove some point.

    And now I have to point out how erroneous the writer here is about business valuations, and the effect of the estate tax on business people who aren’t “rich” by Obama’s definition.
    I have some substantial experience in small business transfers, and I can tell you that about 100% of the working owners of a business that netted 240k/year would sell their business in a minute for 2 million dollars. The writer neglects to figure the cost to the owner of his/her time working in the business, and the risk of running a business. Many businesses that net the owner 240k/year are worth more like $500k.
    Look at it this way. If you could work for someone else and get a salary of 120k. how much would you pay for a business, where you’d work 60 hours/week, put your personal assets up as collateral, personally guarantee all the business debts, have to manage employees. Sure,. you may double your income, but you take on a lot of responsibility and risk.
    You simply can’t say a business is valued at a 6, or 10, or 15% capitalization rate. Too many variables.

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