Estate Tax Speaker: John Russell

Estate Tax Speaker: John Russell

Portland, OR
Owner of Russell Development Company, real estate development

John Russell

Good morning. This is John Russell. Thank you for having me on the call. 

I appreciate the members of the press covering this issue, and the small business aspect of it in particular, because there’s been an awful lot of misinformation out there for the past ten years. I hope today’s call will help clear up some of the misconceptions about the estate tax.

I’m one of the 0.25% of the population who will owe the estate tax. And I’m part of the 1.8% of that small group that will have an estate with significant business or farm assets.

I’m speaking today as a business owner, as the father of three children, and as a citizen of this great country, but a country that I’m frankly quite worried about because of the huge wealth disparity. 

I’ve been reasonably successful.  I spent ten years as General Manager and eventually partner at Melvin Mark Properties, the largest owner of office space in Oregon. I sold my interest there in 1979 and formed my own company, Russell Development, which developed the 500,000 square foot Pacwest Center as headquarters for Key Bank.  Later we redeveloped 200 Market, which became the first multi-tenanted existing building in the country to be LEED certified. I own and manage six office buildings and have some 50 people working for me, directly or indirectly.

Would I say that I did it without public support? No. When I reflect on what helped my business succeed and grow, I owe quite a bit to public investments, including tax policies that help make the real estate industry lucrative.  Without investments by the City of Portland, the State of Oregon and the federal government in redeveloping downtown Portland – particularly the investments in light rail and streetcar systems – my success would not have been possible.

I would also add that the real estate industry is replete with tax advantages that have helped me to attract capital and build my company’s portfolio. Whether it’s accelerated depreciation, selling tax credits to investors, getting state and federal energy tax credits, or tax credits for LEED certification, all those things help a real estate developer like me attract investment and lower our cost of doing business. 

I see the estate tax as a way to pay some of those public investments and tax benefits back to society – to help make success possible for the next generation. That’s why I signed UFE’s Call to Preserve the Estate Tax. I support a strong estate tax. I believe Congress should reinstate the estate tax at the 2009 levels – a $3.5 million exemption and a 45% rate, indexed to inflation, and with the provisions for small businesses and farms that have already been talked about. And they should do it now, and do it permanently, not extend it for another year or two. People planning their estates deserve to know what to plan for.

As I said at the beginning, I also see the estate tax as important because I’m concerned about the overall financial health of our country.  We’re beginning to look more like a banana republic, with huge concentrations of wealth at the top and a middle class that’s not doing well. Our health as a country depends on the prosperity of a vast middle class, and by that I mean the 80 to 90 percent of Americans in the middle.  It takes money to provide the public services that we depend on, and the BEST way to collect those funds is with a progressive tax system.  The estate tax is the MOST progressive tax we have, and the only tax on wealth – after all, it exempts $7 million of net worth…that’s pretty progressive!  We’re talking about only taxing the very very wealthy. It also doesn’t tax anyone who’s living. You know, having a tax that you don’t pay until after you die is a heckuva deal.

One final word about this. To me, it’s outrageous, really, that there’s been this whole effort to repeal the estate tax.  Sure, it needed to be adjusted so that it’s not hitting people who want to pass on a nice home to their kids.  But let’s be clear: this is not a small business or farm issue that has bubbled up from the grassroots; this is an orchestrated effort funded by some of the richest families in the country who want to get out of paying their fair share. The vast middle class has no lobbying money. These wealthy individuals have used small businesses and farms as the all-American icons to promote and front their cause, but as you’ve heard today, the facts just aren’t there to back that up.

Thank you.