Rasmussen v. Rosenblum , 354 Or. 344 ( 2013 )

344 October 17, 2013 No. 51
IN THE SUPREME COURT OF THE
STATE OF OREGON
Gail RASMUSSEN
and Bethanne Darby,
Petitioners,
v.
Ellen ROSENBLUM,
Attorney General,
State of Oregon,
Respondent.
(SC S061470)
En Banc
On petition to review ballot title filed July 5, 2013; con-
sidered and under advisement August 23, 2013.
Aruna A. Masih, Bennett, Hartman, Morris & Kaplan
LLP, Portland, filed the petition and reply for petitioners.
Rolf C. Moan, Assistant Attorney General, Salem, filed
the answering memorandum for respondent. With him on the
answering memorandum were Ellen F. Rosenblum, Attorney
General, and Anna M. Joyce, Solicitor General.
WALTERS, J.
The ballot title is referred to the Attorney General for
modification.
Petitioner requested review of proposed Initiative Petition 12 (2014). Petitioners
challenged the ballot title, the summary, and the “yes” result statement, asserting
that the ballot title and “yes” result statement failed to explain the effect of the
measure on current law. Held: (1) The ballot title must be modified in accordance
with ORS 250.035(2)(a) to reflect that the measure’s effect would be to eliminate
estate taxes that are currently applied only to estates valued at over $1 million; (2)
The “yes” result statement must be modified in accordance with ORS 250.035(2)
(b) to inform voters that the measure would exempt transfers between family
members from existing inheritance and estate taxes on estates of more than $1
million.
The ballot title is referred to the Attorney General for modification.
Cite as 354 Or 344 (2013) 345
WALTERS, J.
Pursuant to ORS 250.085(2), petitioners seek review
of the ballot title for Initiative Petition 12 (2014). Because we
conclude that the ballot title does not substantially comply
with ORS 250.035(2), we refer it to the Attorney General for
modification.
The proposed measure provides, in part, that “[a]ll
family giving is exempt from taxation.” It defines “family
giving” to include giving by voluntary act or by operation of
law from one family member to another family member or
trust. Current Oregon law does not impose a tax on gifts dur-
ing a person’s lifetime; it does impose a tax on property that
is transferred as a result of a person’s death. See ORS 118.010
and 118.160 (imposing state tax on transfers of property
on death). However, that tax applies only to estates valued
at more than $1 million. ORS 118.160(1)(c). Consequently,
estates valued at less than $1 million would not be affected
by Initiative Petition 12 (2014). The proposed measure would
exempt estates valued at $1 million or more from existing
estate or inheritance taxes if such estates are transferred
from one family member to another family member or trust.
The Attorney General certified the following ballot
title:
“Exempts from state, local taxation ‘family giving’
(defined) of any ‘property’ (defined), including by
inheritance
“Result of ‘Yes’ Vote:  ‘Yes’ vote exempts ‘family giv-
ing’ (defined) of ‘property’ (defined)—including inheritance
received from a ‘family member’ (defined)—from state or
local taxation; reduces state revenue.
“Result of ‘No’ Vote:  ‘No’ vote retains law taxing
certain estates and making those to whom estate prop-
erty passes—even if related to decedent—liable for unpaid
estate tax.
“Summary:  Current law imposes one-time tax on
estate of person who dies when value of estate—as deter-
mined by federal law—is $1 million or more; if estate does not
pay tax, those to whom estate property passes are liable; does
not otherwise tax property received as gifts or inheritance.
Measure precludes state, local tax on property—defined
346 Rasmussen v. Rosenblum
as including any legal or equitable interest in anything
of value—given from one ‘family member’ (defined) to
another family member; includes property passed by will,
inheritance, or other operation of law; exempts all ‘family
giving’ (defined) from taxation. Measure does not prohibit
or restrict ordinary property taxes imposed based on own-
ership of an interest in property. Measure reduces state
revenues; provides no replacement. Other provisions.”
Petitioners first object to the caption. A certified ballot
title must contain a “caption of not more than 15 words that
reasonably identifies the subject matter of the * * * measure.”
ORS 250.035(2)(a). Petitioners contend that the caption does
not “reasonably identif[y] the subject matter” of the measure,
because it does not explain its effect on current law. In par-
ticular, petitioners argue that the caption must make clear
“the significant policy choice at the heart of the proposed
measure’s effect”; that is, the choice to exempt “family giving”
from any estate or inheritance tax on estates of $1 million or
more. For that proposition, petitioners cite this court’s deci-
sions discussing a similar measure—Rasmussen v. Kroger,
351 Or 358, 266 P3d 87 (2011) (Rasmussen I), and Rasmussen
v. Kroger, 351 Or 542, 270 P3d 250 (2012) (Rasmussen II)—
and ask that we require the Attorney General to certify for
this measure the same ballot title that the Attorney General
certified for that similar measure.
The similar measure to which petitioners refer is
Initiative Petition 18 (2012). That measure would have enacted
“a prohibition on the imposition of any state or local estate
tax, inheritance tax, tax on property transferred in connec-
tion with a person’s death, or tax on the transfer of property
between ‘family members’ as the proposed measure define[d]
that term.” Rasmussen I, 351 Or at 360. The caption that the
Attorney General initially certified stated:
“Prohibits estate and inheritance taxes, and any tax on
property transfers between ‘family members’ (defined).”
Id.
The court described the parties’ positions as to that
caption as follows:
“According to petitioners, the certified caption erroneously
suggests to voters that the measure would prohibit taxes
Cite as 354 Or 344 (2013) 347
that presently apply to all estates, when, in fact, the present
statutory scheme taxes only estates with a gross value of
$1 million or more. The Attorney General responds that the
caption accurately informs voters that the measure would
prohibit the imposition of any estate or inheritance tax as
well as tax on property transfers between certain family
members without suggesting that all voters currently are
subject to such taxes.”
Id. at 361-62. After observing that it had twice considered
similar arguments, the court referred the ballot title to the
Attorney General for modification. The court explained that
“prohibiting the imposition of current tax measures would
represent a significant policy choice that goes to the heart of
the proposed measure’s effect—i.e., the choice to no longer
impose estate and inheritance taxes on estates valued at
$1 million or more. Because that effect is part of the subject
matter of the proposed measure, it must be acknowledged
in the ballot title’s caption—if it is possible to do so within
the word limit—in order to inform voters of the scope of the
proposed change.”
Id. at 364.
Petitioners urge the same result in this case and ask
us to require the Attorney General to certify for Initiative
Petition 12 (2014) the caption that the Attorney General cer-
tified, after court referral, for Initiative Petition 18 (2012):
“Nullifies existing inheritance tax on estates of $1 million,
prohibits taxing family property transfers.”
The Attorney General recognizes the relevance of this
court’s reasoning in Rasmussen I, but argues that the mea-
sure at issue here is more complicated than was the measure
proposed in Initiative Petition 18 (2012) and asserts that
it would be difficult to more fully describe the effect of this
measure on existing law in 15 words or less. The Attorney
General also argues that the caption that petitioners propose,
if used for this measure, would be inaccurate and thereby
misleading.
We agree that the caption that the Attorney
General certified for Initiative Petition 18 (2012) does not
accurately describe the subject matter of Initiative Petition
348 Rasmussen v. Rosenblum
12 (2014). For instance, unlike Initiative Petition 18 (2012),
the measure at issue here does not affect the taxation of
all estates; it affects only the taxation of estates that pass
to family members or trusts. Therefore, the measure does
not “nullify” inheritance taxes generally, and a caption that
so stated would be inaccurate. However, the fact that the
caption that the Attorney General certified in response to
this court’s decision in Rasmussen I does not precisely fit the
measure now at issue does not mean that we should ignore
the logic of the court’s decision in that case. The court’s con-
clusion in Rasmussen I—that the caption should reflect the
measure’s policy choice to no longer impose an inheritance
tax on estates valued at $1 million or more—is applicable, at
least in part, here.
The proposed measure would exempt many estates
valued at $1 million or more from inheritance and estate
taxes. Many people bequeath their property to family mem-
bers by will, and Oregon law provides that the property
of those who die without wills passes to surviving family
members by operation of law. See ORS 112.015 to 112.055
(law of intestate succession). Furthermore, although design-
ing a caption that accurately reflects that policy choice is
undeniably a daunting task, we do not think that it is insur-
mountable. Without requiring the Attorney General to use
any one of the following suggested captions, we advance
them for her consideration:
Exempts property transfers within families (primarily
inherited estates over $1 million) from state taxes;
Exempts property transfers within families from state
taxes, primarily inherited estates over $1 million;
Exempts transfers within families from tax on inherited
estates over $1 million, other state taxes.
Petitioners also object to the certified “yes” vote
result statement on the basis that it fails to provide the voter
with sufficient substantive information to understand the
policy choice proposed by the measure’s operative terms. We
agree. ORS 250.035(2)(b) requires that the ballot measure
include a “simple and understandable statement of not more
than 25 words that describes the result if the state measure
Cite as 354 Or 344 (2013) 349
is approved.” Like the caption, the “yes” vote result state-
ment also must inform voters that the primary effect of the
measure will be to make transfers within families exempt
from existing inheritance and estate taxes on estates of
more than $1 million.
The caption and the “yes” vote result statement do
not substantially comply with ORS 250.035(2)(a) and (b)
in the respect that we have identified. The ballot title is
referred to the Attorney General for modification.1
1
We reject without discussion petitioner’s other challenges to the ballot title.