Tag: Taxes

A Call To Action: Farmers, Ranchers, & Foresters against HB 2859

This Wednesday at 1pm I’m hoping to see the Oregon Capital building FULL of Oregon’s farmers, ranchers, foresters and woodland owners.  We have been hearing from our industry advocates all winter that they are going to need our help this legislative session and that time is now.

The Oregon Legislature has been scrapping for any amount of money they can get their hands on.  Our state is working with a deficit, which it seems like instead of working through the budget they have, many legislators are grasping at straws to fill the gap.  Silly ideas like a coffee tax, or old car tax have already come and gone.  But Wednesday there will be a hearing to take away tax exemptions that are so valuable to farmers in Oregon, I really can’t stress enough how it would make farming here basically impossible.

Without going into too much detail here, Oregon has a very unique land use system.  One that designates land around the state that is Exclusive Farm Use only (EFU).  This land is used to farm, and grow crops. Basically it disallows you from selling as industrial ground, or ground for housing, development, etc.  Because this limits our ability in what we can do on the land that we own, in turn the state has given us a reduced property tax on those parcels.  The state deemed that ground, because they value farm land, as the highest value being farming.  In my opinion I would have to agree, we have some of the best soil in the world here in Oregon.  So that means that I can’t turn around, sell by the square foot to developers, and make a fortune.  Because of the land use system, and the protections that have been hard fought in this state (and I believe rightly so) that ability is taken from us.

So here is the deal, if you as the state think that our farm ground is so valuable that you give us a special assessment in order to farm, why in the world would you take that assessment away, tax us the same as industrial ground, and then force us to keep it as farm ground?  It makes no sense, and you can rest assured that this gutting of farm assessments, is in turn a gutting of land use laws as they stand today.  This will break our system here in Oregon, one that has allowed me as the third generation on this farm to continue farming. The landscape in Oregon – both figuratively and literally – could change. Who really wants that?

final-112Meet the fourth generation on our farm.  These farm boys love hanging out in our fields, fields that will be too expensive to farm if HB2859 is passed.final-111

The other issue in this legislation is removing our personal property tax exemptions, which would end up driving farms into the ground, ending the legacy that is farming in Oregon.  Our industry by nature creates a significant amount of capital expenditure.  We have millions of dollars worth of equipment sitting in our barns, equipment that will only see the light of day for a fraction of the year.  Take a piece of harvesting equipment, like a combine for example, the cost of which could be anywhere from $350,000 to a half million dollars.  This essential piece of equipment will be used for only about 3 weeks on our farm.

So why bother to upgrade?  We update equipment on our farm as technology changes and equipment becomes more efficient for our farm, our soil, and the environment. Just like many households update appliances in their kitchens.  But how can you afford to update if every time you parked a newer piece of equipment in your barn your tax bill increased so significantly it never penciled?  I did the math, and this part of the legislation alone would take our average profit for the past 5 years.  We could never justify planning for the future on our farm, which is what we do every time we make business decisions.  My business plan is not for the next 5 years, or even the next decade, it’s what is going to be best for my grandchildren and their children.  Between land rent, land taxes and property taxes, I just don’t know how our farm would survive.

Our legislature has to take a hard look at their budget and work within their constraints.  I was at a meeting where Representative Tina Kotek spoke a few months ago and something she said made me realize how concerned we all should be this year.  I’ll paraphrase because I didn’t write down the exact quote.  “We have made a lot of good decisions for Oregonians, now we just need to figure out how to pay for them.”  This goes against everything I believe to my core, everything that business, school, farming, and life has taught me.  No, you need to find what you can pay for and THEN and only then decide on what decisions are best for Oregonians.

We seem to be living in a backwards world here and it’s scary!  So please, come and stand up for Oregon’s farmers, ranchers, foresters and woodland owners on Wednesday!  Tell the legislature that they need to work within their budget just like the rest of the real world.  They need to stand up for farm, ranch and timber!

To write a letter to your legislator you can use the link below through Oregon Farm Bureau:
http://oregonfb.org/advocacy/?vvsrc=%2fCampaigns%2f50222%2fRespond

Why I want to End the Oregon Death Tax…

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?

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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