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Tax Issues to Think About – 2018 Legislative Session



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Onward Oregon

Tax Issues to Think About – 2018 Legislative Session

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Legislative Committees meet briefly in September 18, 19, 20 to discuss the upcoming 2018 Session and decide what can be accomplished. Contact your representatives before this date if you have concerns regarding Oregon tax issues.


Here are some things to think about: (developed with help from Tax Fairness Oregon).

 

Corporate Pass Through Tax Rates: Many small to medium non-passive business owners pay Oregon income taxes at lower rates (7.2% up to $500,0007.6% up to $1 Million) than employees at the same income (9.9%). This includes restaurant, remodeling and construction, retail, fishing, agriculture, forestry, manufacturing, professional services, hospitality, wholesale trade, and otherowners. (ORS 316.044). These lower rates are projected to reduce revenue by $239 Million in the next biennium. Do the benefits to business outweigh Oregon’s responsibility to educate its children and provide critical services? Should “breaks” be limited only to certain sectors or only start-ups? The legislature failed to address this issue last session.

 

Hospitals and Property Taxes: Should hospitals pay property taxes? Should only for-profit hospitals pay property taxes? As an example, if the medical facilities in Umatilla County, a small county with two hospitals and a clinic, paid these taxes, it would generate $1.4 million a year, much of which could be spent for critical services.

 

Hospital and Provider Income Tax: The legislature passed a hospital and provider tax in 2017 which was supported by many hospitals and providers since it will bring in more federal dollars and offset emergency room costs. This is being opposed by some (Representative Julie Parrish, OpEd, Oregonian August 27, 2017).  If they succeed in collecting the requisite signatures, a Special Election will be held in January. One of their claims is that the increased minimum wage will offset rising health care costs. This is bunk. This is an important issue since, if this $335 Million per year revenue is repealed, many Oregonians will lose care under the Oregon Health Plan.  Ask your legislators to speak up about this issue.

 

 

Communication Industry Tax Breaks: Taxes owed by Comcast, Frontier, CenturyLink and other communication companies have been an unresolved issue for several sessions now.  Should they get a tax break? Or are legislators only failing to act because they are great donors with powerful lobbyists?  

 

Real Estate Transactions: Currently a “document recording fee” of $20 is collected each time someone sells real estate. The money ($14 million) supports low income housing.  In 2017 there was an effort to double this amount – it failed.Realtors love to say it will deter homebuyers, but having an extra $14 million a year to help low income, first time homebuyers will do exactly the opposite. Should this be $50, or even $100?

 

 

Nike Off-shore Profits: Analysis by the Institute for Taxation and Economic Policyshows that Nike continues to move profits off-shore to the tune of $1.5 billion. As one of Oregon’s marquee companies, we should all pay attention to what kind of corporate citizen they are. Fortunately, Oregon is one state that does tax businesses on the money they have in most tax havens, however the legislature failed to add some important countries (e.g. the Netherlands) to the list last session. They could add them in 2018.

 

Indexing: We all know that some services are indexed to the cost of living (e.g. Social Security) but some in the 2017 legislature wanted to “index” estate taxes (SB 137), i.e. raise the estate value for taxation. Oregon got $141 million from estate taxes in in 2015 but only 4.4% of estates paid any taxes. Why should we index benefits for wealthier estates when we don’t index low-income benefits like TANF (Tax Assistance for Needy Families)?

 

 

Mortgage Interest Tax Deduction: Currently, mortgage interest deduction benefits primarily go to the more affluent and can be applied to expensive homes and 2ndhomes. This reduces annual revenue by nearly $500 Million and for the most part, only the wealthiest 30% of Oregonians benefit. Yet the National Bureau of Economic Research (search “mortgage interest deduction”) concludes that the “income deduction for mortgage interest payments does not increase home ownership.” The nine states with an income tax that don’t allow the mortgage interest deduction have higher ownership rates than most states. Should we continue this largesse when our schools are terribly underfunded?

 

Onward Oregon encourages you to read up on critical tax issues and check the Tax Fairness Oregon website for more information.

Onward,

The Team from Onward Oregon

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