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Heated testimony on SB 1511: dash‑3 would raise exemption and higher rates for largest estates
Summary
LRO explained dash‑3 to SB 1511 would exempt estates under $2.5M, phase in taxes between $2.5M and $3.0M, and raise rates for larger estates; business groups warned of competitiveness and legal risk while unions and tax‑fairness advocates urged maintaining revenue for services.
The committee heard an extensive public hearing on Senate Bill 1511, which the Legislative Revenue Office presented with a dash‑3 amendment that restructures Oregon’s estate tax. John (LRO) described a three‑segment approach: estates under $2.5 million would owe no tax, estates between $2.5 million and $3.0 million would pay a phased‑in share (20% of the table per $100,000 increment), and estates above $3.0 million would be calculated with higher rates intended to keep the change roughly revenue neutral in initial years. The $2.5 million threshold would be indexed to inflation beginning in 2028.
John’s tables showed about 2,000 filers would no longer have to file at the $2.5 million threshold and identified a crossover value (~$2.893M) where the proposal shifts from net reductions to net increases for estates. He estimated minimal net revenue changes in early fiscal years but noted later reductions as indexing takes effect.
Stakeholders split sharply. Anthony Smith (NFIB) warned the package raises tax rates and could burden small or family businesses and opposed the dash‑3 approach; Derek Sangston and OBI raised legal concerns, saying the package could prompt lawsuits under Oregon’s origination clause because it increases liability for many taxpayers even if the package is designed to be broadly revenue neutral. Brad Dennis urged the committee to consider a ballot approach (IP 51) to eliminate the estate tax entirely. By contrast, Courtney Graham (SEIU Local 503) and Jim Schurzinger (Tax Fairness Oregon) cautioned that the estate tax affects roughly 5% of estates and provides important revenue for services, and they urged caution on indexing and caps.
Committee members asked staff about migration and data limits; LRO said IRS migration data lags and wealth data are limited, though processing fewer returns could reduce administrative costs while requiring initial reprogramming. LRO and staff clarified the estate tax is levied on asset value at death (not taxpayer basis), noting the estate tax can capture unrealized gains.
The committee closed the public hearing on SB 1511 without taking a vote. The record shows a mixture of policy, distributional and legal concerns that committee staff and members will need to weigh as amendments are drafted.
