Tax Insider for May 19
Senate Closing in on Estate Tax Reform: For years, Oregon has stood out as one of the most aggressive estate tax states, tied with Massachusetts for the country’s lowest estate tax exemption. However, Massachusetts has decided to raise its exemption threshold from $1 million to $2 million, leaving Oregon as the lone state with such a low threshold. (Over the last two decades, most states increased their exemptions to align more closely with the federal government’s $12 million).
Despite progressive groups fighting to keep the low threshold, the Senate Finance & Revenue Committee has spent several hearings this session looking to provide relief to the estate tax. Unlike many other taxes, the estate tax exemption is not adjusted for inflation and has not been updated since 2001. Meanwhile, home values and the dollar, generally, have appreciated considerably, making the exemption less valuable each year.
On Monday, the committee held a hearing on a proposal to raise the threshold exemption from $1 million to $1.5 million, which would almost update the amount to inflation from 2001 dollars. Still, it is unclear if the committee will have the votes to pass the bill. Sen. Brian Boquist (I-Dallas) has not been joining the meetings and the committee’s progressives do not seem inclined to support a tax cut without a more comprehensive discussion (read: revenue neutral) about reforming all taxes.
Ambiguities in the Revenue Forecast: The Office of Economic Analysis presented its latest revenue forecast on Wednesday and it’s clear state revenues are continuing to defy gravity. Oregon’s revenue stream was firing on all cylinders during the 2022 tax year and it’s fueling revenue growth and everyone has ideas on how to spend the money. However, there’s one topic that was left out of the forecast presentation and supporting documents, and that is the figure for available revenues. In other words, the amount lawmakers can spend after setting aside the kicker payments set for 2024.