A voter initiative that would phase out Oregon's estate taxes has qualified for the state's ballot in November.
Estates of $1 million or more are taxed at between 10 and 16 percent depending on their value. If approved by voters, the Death Tax Phase-Out Act would reduce estate tax rates over the next three years and eliminate the tax entirely in 2016.
A vote on the measure will come less than two months before federal estate tax rates are set to revert to their 2001 level, taking 55 percent of estates greater than $1 million.
We think Oregonians should dispense with the estate tax. Like many businesses, farms and ranches are often asset-rich and cash-poor operations. The working, thriving ag business that one person spends a lifetime building with the intention of passing on to his heirs can end up being sold in part or in whole for cash to satisfy the estate tax bill.
Opponents of the measure say that Oregon farms and ranches valued at less than $7.5 million can qualify for exemptions that already eliminate most, if not all, the taxes. Proponents contend that the requirements attached to the exemptions make them impractical.
We don't think exemptions or rates are really the issue. How can we justify taking a portion of a person's assets, no matter how vast they may be, at death?
We think that people who, through their own hard work or dumb luck, are able to accumulate assets on which they pay taxes in life should be able at their death to pass those same assets to whomever they wish tax free.
One of the favorite liberal justifications for estate and inheritance taxes suggests that inherited wealth, as defined by the tax code, is dangerous to society and is un-American.
It holds that inherited wealth is inherently unfair, and that government is entitled to a potion of a decedent's amassed riches to balance the scales and keep a slothful, monied aristocracy from holding undue sway over American society.
There's no evidence that state and federal estate taxes have robbed generations of Kennedys, Rockerfellers, Mellons, Fords and scores of other super-rich families their wealth, social stature or privilege. There is ample evidence that confiscatory death penalties have put viable businesses, farms and ranches at jeopardy.
Rather than take previously taxed assets from heirs for a one-time windfall to the treasury, we think it makes far more sense to keep multigenerational enterprises fully intact so that they can continue to generate taxable income for years to come.