The front page of Tuesday’s Oregonian carries a story of the efforts of the Oregon legislature to make the state’s estate tax among the highest in the nation. Here we go again.
There is nobody as economically ignorant as to the effects of tax policy than a liberal Democrat. The legislative machinations surrounding HB 2351 are just the latest evidence of that. It is also evidence that liberal Democrats continue to place the financial well being of government and their financial arm – the public employees unions – ahead of the state’s economy and its small business owners.
Oregon remains only one of twenty states that still have an estate tax. While it exempts the first $1 Million, it taxes the remaining amounts at rates that rise rapidly from 6 percent to 16 percent. For those of you who were forced to endure an education in the Portland public school system that means a farmer, rancher, or small business person leaving an estate valued at $3 Million (not unusual for a farmer, rancher or small business person) will pay between $120,000 and $320,000 to the State of Oregon. Most farmers, ranchers and small business owners don’t have several hundred thousand dollars lying around and are forced to borrow the money to pay the taxes. That is money that would otherwise be used to pay operating costs or expansion costs to create jobs and improve the economy of the state.
It also represents wealth upon which the farmer, rancher, or small businessperson has already paid income taxes over the years while accumulating it.
But Oregon’s liberal Democrats just can’t stand the idea of accumulated wealth. The idea that initiative, hard work and frugality have rewarded some is an anathema to liberals who believe that equal distribution of wealth is more important than the opportunity and effort to excel. When they think of “wealth” they envision the titans of wealth in Oregon – The Knights (Nike), the Boyles (Columbia Sports), the Wendts (Jeld-Wen), etc. but when they act – because the understand so little about economics – they lump together everyone earning more than $125,000 annually or having an estate of $1 Million or more as if they are “wealthy.”
But there is a substantial difference and the difference is mobility. As the legislature moves to make Oregon’s estate tax one of the highest in the nation, the real “wealthy” simply leave. Every estate planning attorney in Oregon will give his or her wealthy clients the same advice – don’t die as a resident of Oregon, move to another state where there is no estate tax or where the estate tax is low and the exemptions are high.
And there is a steady stream of business people doing just that. Just look at the number of former chairmen of the Portland Business Alliance who have left Oregon immediately upon retirement. Just look at the number of widows and widowers who have left Oregon shortly after the death of a spouse to avoid the inevitable estate tax to their heirs when they die.
But that option is not practically available to farmers, ranchers and small business owners and for a very simple reason. Real estate is taxed where it is sitused. Stocks, bonds, and investment portfolios are taxes where the owner is sitused. In other words you take your intangible wealth with you but your tangible wealth stays put. You can’t move a farm or a ranch or a small business to avoid Oregon’s estate tax.
The backbone of Oregon’s economy is its farmers, ranchers and small business owners. The liberal Democrats, in their studied ignorance are killing the state’s economic engine in the name of penalizing the “wealthy.” How stupid and shortsighted.
So what is the essence of the Democrats’ reform of estate taxes? Well they are proposing to raise the exemption from $1 Million to $1.5 Million. But, God forbid, Democrats should ever act to reduce the flow of tax revenue to support the public employee unions, they are simultaneously proposing to increase the tax rate to nearly twenty- percent at the top end.
Who’s going to pay that price tag? Not the very rich – they are out of here. No, the backbone of Oregon’s economy – the farmers, ranchers, and small business owners – are going to continue to suffer under Oregon’s burdensome tax structure. This is beyond stupid.