Friday, October 26, 2012
(Editor’s note: The following opinion was first published in the Sept. 15, 2012, Wall Street Journal. Reprinted with permission.)
Small business owners and farmers have been some of the hardest-hit by the tough economy, and those who stay afloat increasingly worry they won’t be able to pass on their enterprises to the next generation. In liberal Oregon, of all places, a measure will be on the ballot this November to ease the burden by eliminating the state’s death tax.
Last year, after Oregon farmer Pauline Andrews’ grandparents dies, her family had to pay several thousand dollars in death taxes to keep land that had been in the family for over 100 years, and they’ll have to pay again when her parents die. “My family has paid taxes our whole lives,” Ms. Andrews says. “We would definitely have to sell property just to be able to pay the death tax for the third time.”
She’s not the only one. Under current Oregon law, the tax kicks in at 10 percent on estates worth a mere $1 million and raises to 16 percent on estates of $9 million. That hits many family-owned businesses and farms that wouldn’t qualify as rich, even in Elizabeth Warren’s book of envy.
Often, the businesses own assets like buildings, land, equipment or vehicles that make them eligible for the tax but aren’t liquid enough to allow a sale to pay the tax collector. To obey the law, heirs are focused to sell parts of their business or close it down to come up with the cash.
Some 58 percent of all death tax filings on Oregon are on estates worth less than $3 million. That’s no surprise: As businesses and families get close to the federal estate tax threshold of $5 million, they are more likely to have hired lawyers to help them avoid the tax. (Think Warren Buffet.)
Critics of the repeal initiative, known as Measure 84, claim the phase-out over three years will hurt the state’s general revenue fund and thus money for education or welfare. But death tax revenues make up less than 1.5 percent of Oregon’s general fund — roughly $100 million of the $7.5 billion annual budget.
Oregon is merely the latest in a wave of states that are considering or have repealed their estate levies. In 2001, all 50 states had death taxes. By this summer, 31 states had taken those off their books, including most recently Tennessee, which is phasing out its tax over several years, and Ohio, which will eliminate its tax in January.
According to the latest poll commissioned by Common Sense for Oregon, a nonprofit group leading the repeal effort, the measure is ahead by roughly 19 percent. Forty-eight percent of voters support repeal, 29 percent are opposed and 23 percent are undecided. That suggests the repeal effort could still be undone by a burst of opposition advertising, financed perhaps by government unions or a billionaire who shields his taxes by creating a foundation.
They shouldn’t be able to get away with the standard liberal argument that the estate tax hurts no one but the rich. Its biggest targets are family businesses, entrepreneurs and professional households that have saved over a lifetime and that have already paid taxes on their income once or even two times. By punishing them, the economy suffers and so does everyone else.
The best reason to repeal the death tax is moral: It punishes a lifetime of thrift for the inevitability of death and no purpose but punishment.
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Parkdale third graders sing "12 Disaster Days of Christmas"
Welcome to your sing-able Christmas gift list. What follows is an emergency rendition of “12 Days of Christmas” – for outfitting your home or car in case of snow storm, earthquake, flood or other emergency. Read it as a simple list, or sing it to the tune of “12 Days” – you know, as in “ … and a partridge in a pear tree…” Not to make light of it, but the song is a familiar framework for a set of gift ideas that you could consider gathering together, even if the recipient already owns items such as a bunch of coats, tire chains and flashlights. Stores throughout the Gorge are stocked up on all these items. Buying all 12 days might be prohibitive, but here are three ideas for checking any of the dozen off your list (notations follow, 1-12.) The gift items needed to stay warm, dry and safe are also coded to suggest items in your abode (A) in your car (C) or both (B). 12 Gallons of Water (A) 11 Family meals (B) 10 Cans of propane (A) 9 Hygiene bags (B) 8 Packs of batteries (A) 7 Spare coats (B) 6 Bright red flares (C) 5 Cozy blankets (B) 4 Tire chains (C) 3 Flashlights (B) 2 cell phone chargers (B) 1 And a crush-proof first aid kit (B) Price ranges? Here’s a few quotes for days Three, Two, Four and Nine: n A family gift of flashlights (three will run $15-30, Hood River Supply, Tum-A-Lum) n Cell phone chargers (two will run $30-60) n Tire chains (basic set, $30, Les Schwab, returnable if unused for the winter) n Family meals ($100 or so should cover the basics for three or four reasonably well-fed days) n The home kit should be kept in a handy place near an exit, and remember that water needs to be replenished every few months. If you have a solid first aid kit already, switch out the gift idea with “and-a-sto-o-u-t- tub-for it-all …” Otherwise, it’s a case of assembling your home or car kits and making sure all members of the family know what the resources are and how to use them (ie flares and propane). Emergency situations are at worst life-threatening, at best deeply uncomfortable if you and your family are left without power for an extended period, or traveling and find yourself in a situation where you need to wait out a storm, lengthy traffic delay, or other crisis. Notes on the 12 gift ideas: 12 – Gallons of water: that’s one per person in a four-member family to last for three days, the recommended minimum to be prepared for utility outages. 11 – Easy-open packaged goods, energy bars, dried food and nuts are good things to include for nutrition. Think of what your family of four needs for three days to stay fortified and hydrated (see number 12). Can-opener also recommended 10 – If you have a propane camping stove, keep extra fuel handy. 9 – Hygiene bags: put packaged moistened towelettes, toilet paper, and plastic ties in large garbage bags (for personal sanitation) Resource list courtesy of Hood River County Emergency Management, Barbara Ayers, manager/ 541-386-1213. The county also reminds residents to Get a Kit, Make A Plan to connect your family if separated, and Stay Informed. See www.co.hood-river.or.us to opt-in for citizen alerts. Enlarge