Measure 84:
Two New Tax Breaks for the
Richest 2% Among Us
What will this measure do
if passed?
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No estate tax upon death.
No tax of any kind when ownership is
transferred within the family during life. This
means: NO GIFT, CAPITAL GAINS, INCOME
OR REAL ESTATE TRANSFER TAXES.
First we’ll talk about the estate tax, then the prohibition
against all taxes.
Oregon Estate Tax Facts
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Families pay only when their assets are worth more
than $2 million ($1 million for singles).
That is, two million dollars after deducting
mortgages; paying all bills, including medical bills
and the legal and accounting expenses of the
estate; and making charitable donations.
Only 2% of the population in Oregon actually pay an
estate tax. With 32,000 decedents each year, 730
pay an estate tax.
Eliminating the estate tax will benefit only the
wealthiest 2% of Oregonians.
What does the Oregon
Estate Tax do for Oregon
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Adds $100 million in revenue per year.
Helps to fund schools, state troopers, roads, health
care, prisons and all other things state government
does for Oregonians.
For example, $100 million is enough to pay for 1,200
school teachers for a full year of school.
If repealed, what will the loss of revenue do to the
necessary services provided by the State of Oregon?
Who makes up the difference?
What assets are found
in estates that
pay an estate tax?
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Farms -- about one-half of one percent.
Family business assets -- less than 10%.
Stocks, bonds, homes, real estate, cash, insurance,
retirement accounts, mortgages and art -- 90%.
Source: Congressional Research Service Report: IRS, Statistics of Income, Estate Tax Returns Filed in 2003,
October 2004. Note. this is the year with most filers eligible for a $1 million exemption, thus most similar
to OR.
The family farm is not in
danger from the Estate Tax
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Under recent Oregon law changes, farm and forest families
pay only if their assets are worth more than $30 million ($15
million for singles).
These families can pass on to their heirs up to $15 million in
farm or forest assets tax-free ($7.5 million for singles), if the
family continues the business.
The provision is so generous that families can include farm
homes and up to $2 million in working capital as untaxed
assets ($1 million for singles).
Extremely few Oregon farm or forest families pay any estate
tax on their farm or forest assets.
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In the past, provisions for farms have been far less generous.
Still, there are “1,144 farms in Oregon that have been
operating continuously for over 100 years.” --Oregon Live.Com
updated July 30, 2012
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The American Farm Bureau acknowledged to the New York
Times several years ago that it could not cite a single example
of a farm having to be sold to pay the estate tax. --CBPP The Estate
Tax: Myths and Realities
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The Congressional Budget Office found that of the few farm
and family business estates that would owe any Federal estate
tax, the overwhelming majority would have sufficient liquid
assets (such as bank accounts, stocks, bonds, and insurance)
in the estate to pay the tax without having to touch the farm or
business. And if it is a problem, they have 14 years to pay.
Of the 38,000 farms in Oregon, 2/3 are “hobby farms” and do
not meet the definition of a family or commercial farm.
--Oregon Department of Agriculture
Farms in Oregon
State of Oregon Agriculture, Oregon Department of Agriculture, 2010
The Estate Tax does not
prevent a better life
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The tax impacts only those with significant resources
who have the ability to pay.
A taxable estate includes all assets minus transfers to
one’s spouse, debt, last medical, attorney and
accounting expenses. The $1 million exemption of the
first to die can be saved and used when the second
person dies.
Those subject to the estate tax have the opportunity
during their lifetime to provide their children and
grandchildren with the best schools, equipment,
resources and opportunities to succeed.
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Examples:
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A couple’s taxable estate worth $3 million, taxed
only at the second death, pays $101,250 in tax.
This leaves nearly $2.9 million for the heirs.
A single person’s estate valued at $3 million
pays Oregon estate tax of $205,000.
Inheritors receive nearly $2.8 million.
The estate tax does not
eliminate jobs in Oregon
• If trickle down worked, we’d be
swimming in jobs today.
The Estate Tax is not
double taxation or unfair
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The appreciation over time of an asset, say real estate,
is known as “unrealized capital gain” until taxed when
sold.
Estates subject to the estate tax include significant
“unrealized capital gains.”
56% of larger estates and 36% of all estates are gains
that have never been taxed.
All inherited assets get a date-of-death valuation.
The estate tax is the means – the only means -- of
taxing these unrealized capital gains.
No tax on transfers
within the family
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Hidden in Measure 84 is a prohibition against any tax on the
transfer of property among family members at any time.
Nothing prohibits the family member receiving the asset
from immediately selling it at the newly acquired value.
No family member would pay tax on capital gains or profits.
This could be used to transfer stock, homes, commercial
buildings, crops, art or any other assets and never pay
taxes on the capital gains.
This creates a huge tax loophole that must not be opened.
• The richest 2% receive 75% of all capital gains.
• CPAs and tax lawyers could be sued for failing to
recommend this tax dodge to high asset clients.
• The state has not estimated the impact this would have
on state revenues.
• We think it will cost even more in lost revenue than the
elimination of the estate tax.
An example:
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A wealthy NY resident owns $100 million of Oregon
timberland originally purchased for $1 million.
He sells the land to his son for $100 million and gets
an IOU.
The son immediately sells the property for $100
million and pays off the IOU.
Neither father nor son owes Oregon tax on the $99
million gain.
This tactic will also work for the Oregon resident .
So who benefits from
Measure 84 if it passes?
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The benefits of this measure will flow primarily to
the richest 2% of Oregonians when they sell or
inherit stocks, bonds, homes, or other real estate.
Proponents talk of double taxation.
With Measure 84 they seek no taxation, ever.
Measure 84 is just two new tax breaks
for the richest among us – and it does
nothing for the other 98%.
Why we need to
Vote NO on Measure 84
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Estate and capital gains taxes provide substantial
benefit to all Oregonians.
If we do away with the estate tax, the rest of us will
have to make up the $100 million in lost revenue.
If we create a capital gains tax loophole, the rest of
us will have to make up for the unknown millions that
will be lost.
We do not need to give additional tax breaks to the
richest among us.