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Estate tax deserves its final rest

Published on October 5, 2012 3:01AM

Last changed on November 2, 2012 9:18AM


Officially known as the Death Tax Phase-Out Act, Measure 84 on Oregon's ballot is a statutory measure that prohibits the state or any local government from imposing any estate or inheritance tax.

According to the Heritage Foundation, death and taxes have been linked since the Egyptians first imposed a 10 percent tax on estates in 700 B.C. The first calls to eliminate the dreaded "death" tax likely came shortly thereafter.

Estate and inheritance taxes came to America in colonial times, but weren't imposed in earnest by the federal government until the Civil War. They have since been adopted by many states. Oregon taxes estates with a gross value of $1 million or more. A national movement to eliminate state and federal death taxes has been gaining momentum for several years. Measure 84 is sponsored by Common Sense for Oregon.

Measure 84 would reduce Oregon's estate tax each year starting in 2013, and eliminate it in 2016. It would prohibit state and local governments from imposing estate taxes, or taxes on the transfer of assets between family members.

Oregon's inheritance tax raises about $100 million a year. Opponents say Measure 84 is nothing more than a tax break for millionaires that will rob the state's general fund of money needed for education, healthcare and public safety.

Supporters say the "millionaires" who pay the tax are most often small business owners whose wealth is tied up in assets necessary to continue the business. They say a gradual phaseout will give the Legislature time to find other funding sources.

They note that Measure 84 calls for a change in state statute, not a constitutional ban. That means at some later date the Legislature could reinstate the tax if it fails to come up with an alternative.

While only estates with a gross value of $1 million or more qualify to pay the tax, determining whether any individual estate must pay is complicated.

Proper estate planning may reduce or eliminate much of a decedent's tax bill, while those who die untimely or without benefit of competent counsel pay dearly. Spouses who hold assets jointly can effectively exempt $2 million at death. Farms, timber concerns and other natural resource-based estates can qualify for a tax credit -- not an exemption -- of up to $7.5 million if the decedent and the heirs meet strict requirements prior to and after the estate transfers.

Opponents say only 2 percent of estates pay, making the average tax bill $187,000. If that's true, the average taxable estate had an adjusted value of more than $3 million, according to state tax tables. That seems high, leading us to suspect the actual number of estates paying the tax is much greater and includes many Oregonians who in life never would have considered themselves anything but middle class.

In life they paid taxes on their income, their dividends, their capital gains and their real property. We reject the notion that at death the state stands ahead of rightful heirs.

We vote yes.


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