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Hold firm on estate tax.

Byline: The Register-Guard

State Sen. Ginny Burdick, the Portland Democrat who chairs the Senate Finance Committee, says Oregon's estate tax system is "a mess." She's right. It's in serious need of an overhaul. But any fix should preserve the $100 million per year the state receives from the tax, especially at a time when the state faces long-term economic uncertainty.

Earlier this month, the House approved a bill that would reform Oregon's estate tax with the intent of making it easier for family farms, ranches and forestlands to be passed from one generation to the next.

It's a worthy goal. Children of farmers and timberland owners should be able to inherit properties from their families without having to log or sell off portions to pay the state estate tax. An inheritance should not be an unwelcome burden.

House Bill 2541 would not repeal what critics are fond of mislabeling as the "death tax" - a term that creates the false impression that the estate tax eventually hits everyone. (In fact, the rate applies only to the portion of the estate that exceeds the exemption.) Instead, HB 2541 would raise the estate tax exemption from $1 million to $1.5 million, subjecting fewer families to the tax.

That portion of the bill has support among both Democrats and some Republicans, with the exception of anti-tax activists who want Oregon to abolish the estate tax altogether. But a provision that would raise the top rate from 16 percent to 19.8 percent to ensure that estate tax revenues hold steady has prompted second thoughts on both the right and left.

Here's where it gets interesting - and a tad Machiavellian: Kevin Mannix, a former conservative state lawmaker and a prolific proponent of initiatives for the past two decades, informed the Senate Finance and Revenue Committee on Monday that he has been working on an initiative that would repeal Oregon's estate tax.

No surprise there. But instead of warning lawmakers not to increase the top rate to nearly 20 percent, as one might expect, Mannix urged them to do precisely that. Doing so, he said, would play into his hands by giving Oregon one of the nation's highest estate tax rates and boosting his repeal effort. "It's like that 'Dirty Harry' movie - make my day," Mannix said.

Mannix's Clint Eastwood imitation prompted second thoughts among some Democratic lawmakers who are reportedly considering either reducing or eliminating the proposed rate increase to make a reformed estate tax less politically vulnerable.

Lawmakers shouldn't be so easily intimidated - and manipulated - by Mannix. While he has an impressive track record of initiative successes, it's far from clear if he could persuade Oregon voters to repeal an estate tax that provides the state with $100 million in desperately needed revenues. Mannix's task would be made more difficult by the fact that the estate tax would affect less than 1 percent of all Oregonians under the proposed reforms.

Lawmakers should either remain committed to an estate tax reform bill that both raises the exemption and increases the top rate to remain revenue neutral - or they should stick with the existing estate tax, warts and all. But lawmakers should not be cowed by Mannix into a reform that reduces state revenues at a time when they state cannot afford any more reductions.
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Title Annotation:Editorials
Publication:The Register-Guard (Eugene, OR)
Article Type:Editorial
Geographic Code:1U9OR
Date:May 25, 2011
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