Tag Archives: Succession Planning

Why I want to End the Oregon Death Tax…

25 Jun

I have been working on a campaign to End the Oregon Death Tax for about 6 months now.  It all started when I got wind of a small gathering in my town to talk about the death tax and an initiative that was hopefully going to make it to the ballot this coming November (with a lot of work, signature gathering, money, etc.)  I feel like I’m a fairly informed person, I love to learn and read and try very hard to keep up on what is going on, especially when it comes to issues that are close to the agricultural industry.  So when I heard a lot of facts about the death tax in Oregon, I realized that this issue was much more detrimental and harmful than I ever expected.

I know that I have written a blog about this issue already (as have many of my friends) but I feel as though lately I’m getting more and more questions about why this is important and more and more statements from people about why farmers have never been and aren’t going to be effected by this and it’s all about big rich terrible slimy investors saving in taxes.  I’m sick of people asking me how much my farm is worth, and then telling me that there is no way I will reach an exemption.  I’m sick of people looking at the death tax as a non-issue just because it doesn’t affect them since they aren’t millionaires.  So here you go, all you naysayers!  Here is my honest story about why the Death Tax WILL affect me someday.
  1. To those who say farmers have never been and won’t ever be affected…
    I personally know of farms that have been split up because of the death tax liability.  They have had to sell off portions of their farm, split up a family business, and take huge hits personally because of a death of a parent.  To those who want specific examples, that is as specific as I will get because it’s their story to tell. 
  2. To those who want to know how much my farm is worth and if I will reach the exemption…
    I want to give you an example of a typical farm in my area. 1000 acres of prime farm ground, market value can be upwards of $10k-15k per acre.  Right off the bat with only the land, not including buildings, houses, shop equipment, harvesting equipment, large tractors, trucks, etc, you are hitting $12 million dollars.  So let’s say that both parents die, and the agricultural exemption (even though no one can really explain it to me clearly) is at $7.5million per person.  If we take a conservative land value amount along with all the other things involved in running a farm you’re still left with about $3 million that is taxable, usually at a rate around 10%.  Are you still doing the math?  It’s $300,000…in cash…that you and your siblings as heirs have to pay to the state within 9 months.  Do you have that kind of cash??  Or do you expect a farm to have that kind of cash when over farms are usually very leveraged against that land just to make their operating loans every year?  And just as a reminder, majority of these farms are generational, so as it is in my case, more than likely the family a generation before has already paid the tax on that same base of land.
  3. Death Tax is a non-issue and won’t affect anyone other than millionaires…
    This tax, doesn’t just tax the rich, it inhibits and discourages successful business to come into our state.  Oregon is becoming an increasingly business unfriendly state and I think this is another way that we can start to turn that around.  You can’t have a healthy economy without jobs, and you can’t have jobs without businesses willing to come in, invest in our state, and plan to stay for the long haul.  I can’t move my business, but I have to tell you that after paying income taxes, after dealing with measure 66 and 67, there is a large part of me that wishes I could pick up my soil and move it to a state that sees the common sense piece that in Oregon we are missing.  I am not a millionaire, my dad is not a millionaire, and my grandfather was not a millionaire.  We are farmers who just want to be able to farm the soil that generations of blood sweat and tears have given to us.
As you can see I’m passionate about this issue because I honestly see it as a true road block for my future here in Oregon agriculture.  Please take the time to look at the issue, contact me if you have questions and I will try to help to clarify, and please help us to get this out of our state so we can start healing and making Oregon’s economy better for family business.  Also just fyi…signed petitions are due July 6th!

Death Taxes…How will they Impact our Farm?

7 Apr

I was in an article last week in the Oregonian about passing down the farm and how my family is planning for that transition. After the article posted online I was very amazed by how many comments were made going on and on about how the death tax in Oregon isn’t going to inhibit our family’s ability to farm or pass the farm along to the next generation. To be fair there were comments going both ways, but I would still like to set a few things straight. First of all I’m writing this on my blog and not on the actual comments because I felt the need to defend my support of getting rid of the death tax over and over again, so I’m just doing it once here and those that want to read it, great, those that don’t, that’s fine too. Plus I was told a few months ago after I expressed my exhaustion of trying to convince people of certain things that I believe in, and finding that they are closed off to new suggestions or new ideas, that maybe my plan shouldn’t be to change the minds of the 5% that are adamant of certain things in life, I should focus on trying to inform the other 95% that don’t quite have their minds made up or have a more neutral attitude.

So here goes. I would first like to say that in our family, my generation hasn’t had to deal with estate taxes, since my mom and dad haven’t passed away yet. So it’s not fair to say that it won’t be a hindrance to us when that does happen someday (hopefully a faraway someday). We just recently met with their attorney and we were shown that even with lots of careful estate planning, and lots of money to attorneys and accountants we will still have to pay significant taxes when that day does come. Taxes that hopefully will be covered by life insurance, which in itself is not cheap and has to be paid for until their death!

Ag exemptions or Natural Resource Exemptions do exists, but they only increase the exemption to $7.5 million, they don’t get rid of the tax. So in reality you’re still paying the taxes and it is still a very real threat to farming families. And you might think that farms could never reach that high of estate value, well you’re very wrong. When land values can sit anywhere from $7,000 to $15,000 per acre in our area, $7.5 million can be reached in a hurry. And even if you don’t end up reaching that threshold, how much money have you already spent in fees to attorney and accountants just to get that exemption and get things all set up so that you don’t have that tax liability? I’ll tell you right now, it’s not cheap!

Plus the estate tax is a double tax! Me, my parents, everyone has been paying taxes their whole life on their business. So why in the event that you die does the state feel like they are entitled to a portion of what you have worked so hard for?! We are only a fraction of states that still have the death tax at a state level; I don’t think it’s a fair tax at all! It also affects small businesses in Oregon and I truly feel that it hurts Oregon’s business economy. There was a study done on the economic impacts that would be made if Oregon got rid of the estate tax, 44,500 jobs it was they found to be the impact. These were jobs that would be created in our state, easily making up the small loss in revenue that the state would take!

There is a proposed initiative to get rid of the Death Tax in Oregon over a 4 year period. Signature cards are being signed right now to try to get this on the ballot this November. You can go to End Oregon Death Tax to get more information and sign a signature card to help us get this on the ballot this coming November and hopefully rid Oregon of this double, non-business friendly tax!

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