Some lawmakers want to overhaul the Oregon‘s estate tax, which is the only one in the nation that kicks in on fortunes worth as little as $1 million.
To put that in perspective, if a high net worth individual dies in New York state, they can pass down a maximum of $7.16 million to their heirs completely tax free.
A group of 10 Oregon Republicans are sponsoring a bill that would lift the tax exemption up to $7 million estates, much like New York. Any dollars past that amount would be taxed at a flat 7 percent, according to House Bill 2301.
Oregon estates above $1 million are currently taxed at 10 percent to 16 percent, which makes this bill a tax cut as well.
Republican Rep. Bobby Levy, who is a cosponsor of the legislation, told The Oregonian that some say the estate tax has made Oregon ‘the most frightening place to die.’
Proponents of the bill say inflation and the value of homes have exploded since 2006, when the $1 million estate tax exemption was put in place.
And since Americans’ primary residences often make up the majority of their net worth, the bill’s supporters feel they shouldn’t be penalized for a booming housing market.
Rep. Kevin Mannix, a Republican and one of the main sponsors of the bill, said he knows of people who have moved away from Oregon so their children wouldn’t have to pay the estate tax.
Republican Representatives Kevin Mannix (left) and Bobby Levy are among the main supporters of the bill seeking to overhaul the estate tax to apply only to fortunes worth more than $7 million
Mannix, along with two dozen others, made public comments during a Thursday hearing in front of the House Committee on Revenue. Over 100 others submitted written comments, with the majority who testified showing support for the bill.
‘How many folks in their retirement years are moving out of Oregon to reside somewhere else, such as Nevada, or Idaho or California, none of which have estate taxes?’ Mannix told the committee without providing data for his claim.
Oregon’s population has been shrinking by the thousands since the pandemic, but it isn’t clear that the estate tax is among the reasons for people fleeing.
Greg Peden, a Yamhill County resident, testified that he supports the bill, believing that Oregon’s estate tax is more likely to drive people away to states with looser regulations.
‘This is a question in my mind, not about who is paying the tax or how rich are they,’ Peden said. ‘This is a question about competition, and we are no longer competitive on the national scheme in our taxes.’
Peden said the estate tax affects ‘average Oregonians.’ He counted himself in that category, saying that the home he bought 22 years ago for $400,000 is now worth $1.1 million.
‘This is a 2,800-square-foot ranch house in Yamhill County,’ he said. ‘Nice place. Nothing super fancy. …When my home was worth $400,000, the $1 million threshold seemed OK, reasonable.’
Those against raising the cap to $7 million testified that it will exacerbate the wealth gap in Oregon.
Democrats control the Oregon House of Representatives, the Senate, and the governorship, which means Republicans could have a tough time getting their estate tax reform passed
‘What problem does this bill solve, when the rich get richer and the poor get less in state services as a consequence?’ said Stephen Wright, a leader of the nonprofit Tax Fairness Oregon.
Jody Wiser, who founded Tax Fairness Oregon more than 20 years, told the committee to reject the bill.
Wiser said she wants her estate to be taxed when she dies. She added that heirs of people with fortunes worth more than $1 million, including herself, don’t need an additional advantage.
‘Like many children who inherit, my children already have homes, jobs, businesses and portfolios,’ she said. ‘In addition they left college debt-free. Are they heirs who need a tax break? I think not.’
Others who are against the bill argue that it will drastically reduce the revenue coming into the state.
Democratic Representative Nancy Nathanson, who chairs the House Committee on Revenue, asked the state’s Legislative Revenue Office to provide more data on how much money the government would be missing out on if the Republican-backed bill were to pass.
Jon Hart, an economist within the office, said if the bill took effect right away it would reduce Oregon’s estate tax collection by about 86 percent.
So, instead of collecting $700 million over the next two fiscal years, the state would only get $100 million.
Based on data from the Legislative Revenue Office, Oregon has more than tripled its revenue from estate taxes in the last 12 years to $339 million.
In 2022, about 2,200 estates were taxed in the state, according to The Oregonian. That represented about 5 percent of all deaths that year.
Hart also argued that there’s nothing to substantiate the claim that people are moving out of Oregon because of the estate tax.
He said elderly people tend to want to live in warmer climates, lower crime areas and most importantly, where their family and grandchildren live.
Others who testified at the public hearing supported a middle ground solution by raising the estate tax exemption to $2 million or $3 million, but not $7 million.
The Senate Interim Committee on Finance and Revenue introduced a bill that said the threshold should be raised above $1 million but hasn’t specified a new number.
That bill calls for the limit to be subject to annual cost-of-living adjustments. Other states with estate taxes, like New York and Connecticut, make upward adjustments to the exemption every year.
Since Democrats in Oregon have healthy majorities in both houses and control the governor’s mansion, it’s not clear Republicans will enough support to get their desired changes to the estate tax passed.
This article was originally published by a www.dailymail.co.uk . Read the Original article here. .