So wrote Jonathan Swift in 1710. (The Web says so, according to Freakonomics.) Also: “A lie can travel halfway around the world while the truth is still putting on its shoes,” a variation attributed to Mark Twain, who may have said it. In 1820, the Portland (Maine) Gazette published “Falsehood will fly from Maine to Georgia, while truth is pulling her boots on.”

Which brings me to the season, following Oregon’s long legislative session, in which representatives extol triumphs on our behalf. Take Rep. Kevin Mannix (please), who wrote an op-ed in his hometown rag, Keizertimes, about the estate tax bill he fathered. Mannix claimed the bill would save family farms, which is how opponents of the estate tax have framed their campaign for decades.

I called the publisher, who printed my counterpoint in the next issue. Then Capital Press, one of a network of online and print papers throughout the state, published an editorial praising Mannix’s bill, which by then the governor had signed. I first saw it in the Bend Bulletin. The Capital Press managing editor returned my phone message. I told him that his reporter had written a decent he-said/she-said story on the bill but didn’t have a clue what was in it, because of course very few understand tax law, and in my experience young reporters haven’t learned how to ask questions. (I pause here for embarrassing memories of my own inexperience.) Within an hour of submission, my op-ed was online and scheduled for print.

I hope I don’t chase this one lie all summer. Text follows.

Estate tax law is a boon for billionaires

The July 20 editorial (“Death tax exemption will save Oregon farms”) continues the obfuscation of Rep. Kevin Mannix, whose original estate-tax bill had zero to do with “family farms” and in its final version has little relation to them.

Mannix and the Capital Press appear to share a cause: abolishing the estate tax, cleverly labeled the “death tax.” Of course, dead people don’t pay taxes, their heirs do. Only 4% of Oregonians who die each year have their estates taxed by the state. It is an American idea, in its present design created during Woodrow Wilson’s presidency: inhibit permanent aristocracies seeded by Gilded Age fortunes.

I’ve followed estate tax policy since 1997, when Congress created a benefit for family businesses for the same reason advocates claim for SB 498, the bill the governor just signed. Farmers have long been the poster child for the estate tax, which Congress has gutted since 2001. Because the estate exemption is now $26 million for married couples, less than 0.1% of estates pay any federal tax.

As the editorial concedes, Oregon farms, fisheries and forest businesses are protected by a 2007 state law: The “natural resources credit” allows an estate of up to $15 million to pass tax-free to children a portion of the estate represented by the natural resource business—if the business constitutes at least half the estate’s value. Its purpose is to ensure that family farms can be passed to the next generation untaxed, provided the children continue operations. Around 50 estates use the law annually; a handful of them exceed $5.5 million, according to the non-partisan Legislative Revenue Office (LRO).

Mannix originally proposed that anyone who bought $15 million in “natural resource” businesses late in life—Nike’s Phil Knight, for example—could pass it tax-free to an expanded set of heirs. The heirs would have no obligation to continue the business; they could sell it immediately and owe no estate tax. That’s not a heritage farm.

In the bill’s final version, the relatives would be required to maintain the business for five years. But one might ask: On what planet is $15 million a “small farm”? Reports LRO, the average natural resource business claiming the credit is worth less than $2 million. In 2020, only 2% of all estates had a value exceeding $10 million.

Advertised as a simplification of current law, SB 498 would instead create an alternative that would allow the children of billionaires tax-free inheritances. At an initial cost of $7.5 million a year, about one-fifth of the expenditure would benefit currently eligible claimants of the natural resource credit; the rest would go to estates now ineligible. Out of 45,000 deaths in Oregon annually, 170 estates could use it—less than 0.4%.

Advocates contend the current credit is cumbersome. But so is the alternative under SB 498, which is too weedy to detail in this space. Suffice to say it simplifies in some ways and complicates in others. That’s the nature of any law that bestows exceptions to tax rates: it’s complicated. Accountants will study the two regimes and decide which is of greater benefit to a client, thus increasing their billings. (Any small business that doesn’t have an estate planner is pound-foolish.)

Oregon has a zero-sum tax system: If one person’s taxes are cut, another person’s will increase, or the state will cut services to offset the revenue loss. Viewed alone, “The estate tax is unfair,” some say. Others reply, “The kids of billionaires ate from silver spoons—you would raise my taxes to coddle them?” The real question: Why did the Senate Finance Committee, which held six hearings on estate tax bills, devote so much energy to reducing the taxes of Oregon’s wealthiest children?