At its August special session, the legislature will address a drop in revenue due to the COVID recession.
The shortfall is about $1 billion. Leaders have proposed spending cuts and use of reserves. The forecast is for an even bigger deficit in the next biennium.
Unfortunately, they have proposed no increase in tax revenues as part of a balanced plan.
The CARES Act, enacted in March, included a half-dozen provisions that harm Oregon’s general fund. The first four, listed in the Legislative Revenue Office report, reduce Oregon’s 2020 revenue by $250 million – almost all of it benefiting the already wealthy. Legislators need to act now, before 2020 taxes are filed, to disconnect from these provisions. The legislature is traditionally reluctant to change tax law retroactively, so this is work for 2020.
According to the congressional Joint Committee on Taxation, 88% of the tax break losing the greatest revenue ($89 million) will go to taxpayers with incomes greater than $500,000, and 95% to those with at least $200,000. To put this in perspective, in 2018 the top 1% of income earners in Oregon reported at least $369,000 and averaged nearly $1 million. Median family income was $53,000; for Black Oregon families it was $32,000.
The benefits of these four measures will overwhelmingly go to the very wealthy, and they are overwhelmingly white. They will be paid for by cuts to services for those with low incomes and people of color.
So why should the legislature cut checks to the wealthiest and reduce funds for the aging and people with disabilities and for mental health services? This is an immoral choice.
The wealthiest in Oregon will still get the much larger federal benefits, and they pay much lower federal taxes thanks to the 2017 cuts. They get most of the Oregon kicker and benefit from lower state pass-through rates and a host of other corporate and high-income tax loopholes.
Contact your legislator and tell them to disconnect from these federal tax provisions.