Mitigating the effects of Oregon’s punitive estate tax is a key goal of OBI’s Growth and Innovation Roadmap. And for good reason. As OBI’s Scott Bruun testified on March 27 before the Senate Finance and Revenue Committee, Oregon law exempts only the first $1 million of a person’s estate from taxation, making it extremely difficult for Oregonians to pass on small businesses and farms to their children. In fact, as Bruun noted, Oregon is one of only two states to set the estate exemption bar this low.
The practical effects of Oregon’s current law are damaging. The low threshold provides a powerful incentive for business owners to move out of Oregon, depriving the state of the jobs and revenue business investment provides. The state’s tax environment also discourages people from starting businesses here in the first place.
Senate Bill 68, the focus of Bruun’s testimony, would render Oregon’s estate tax less harmful. It would do so by adding an exemption of $1.5 million for estates valued up to $4.5 million, then progressively reducing the additional exemption for estates valued up to $8.5 million. At that point, the additional exemption would go away. The current base exemption of $1 million would continue to apply to all estates.
Though repealing Oregon’s estate tax entirely would improve Oregon’s business climate significantly, the additional exemption provided by SB 68 would mitigate the harm done by the estate tax to most of those who pay it. According to the Legislative Revenue Office, 82% of estate tax returns filed in 2020 were for estates of less than $2.5 million.
Meanwhile, Oregon’s overall business tax burden has increased by 30% since 2019, according to a study conducted by Ernst & Young. Oregon’s family businesses are continually squeezed between the state’s unyielding estate tax and an expanding array of state and local business taxes.
Read Bruun’s full testimony here.