What is Tax Fairness up to in Salem?
For the 2019 session the TFO Steering Committee will screen over 3000 bills, study deeply where we feel necessary, and act – meeting with legislators and testifying at hearings to defeat bad ideas and support good.
More importantly, we’ve convinced legislators to get six bills drafted that will RAISE revenue.
Each of the first three would raise over $1 billion per biennium.
#1 Increase corporate income taxes.
Corporations figure their taxes two ways and pay the higher of the two. We propose to increase tax rates under both methods.
Unlike most states, in Oregon corporations pay income tax at lower rates (6.6% and 7.6%) than do its citizens (a top rate of 9.9% on income greater $125,000 for single filers). We would tax corporations at exactly the same rates and thresholds as single filers.
We would simplify and increase the minimum tax:
- Increase the bottom from $150 to $250.
- Retain the small-business carve-out where those with revenue of less than $500,000 pay only the $250.
- Increase the rate would from 0.1% to 0.3% for income above $500,000.
- Repeal the cap that allows a business with $1 billion in revenue to pay the same $100,000 as does one with $100 million.
#2 Change property taxes for commercial and industrial properties (does not include farms, forests or apartments or residential properties) so taxes are paid on their current market values, rather than their 1995 value adjusted by 3% a year.
Business property taxes are inequitable; some businesses are paying taxes on their full market value while others pay taxes on only 30% of what they would sell for. Even taxes on new properties are haywire. Under current law, a new office building, warehouse, gas station or other commercial or industrial property in Coos Bay would pay taxes on 94% of its value, while one in Portland would pay taxes on only 45% of its value.
The added revenue from our reform would go to local schools, community colleges, fire and police, and city and county services.
#3 Increase taxes on tourist lodging; and on beer, wine, tobacco, vaping. The new rates would be right between what one would pay in taxes for those products and services in California and Washington.
We currently tax tourists significantly below what we pay in taxes when we visit neighboring states. And the same is true for addicting substances. Do Oregonians care more about keeping low taxes at our local breweries and wineries than we care about our local children?
For each of these excise taxes, we would find the new tax rates by finding the middle between our neighbors’ taxes. For example, if the total of all taxes on a bottle of wine is $1.10 in California and $.90 in Washington, then we’d raise Oregon’s tax to $1.00, right between the two.
Then there are the three less productive, but excellent policy ideas:
Get rid of the $150 million subsidy for a baseball stadium in Portland. In 2003, when a different major league baseball team idea surfaced, legislators passed a bill that basically says all of the income taxes on players, managers trainers and their wives will be diverted from the common good to the good of the owners of the team, to pay off $150 million of bonding for the stadium. Our bill simply eliminates that section of the law.
Return the tax haven law that Oregon had on the books and then got rid of in 2018 on the mistaken belief that what the Trump administration passed in December of 2017 solved the problem of businesses hiding their profits off shore. It is now believed that the new federal laws made things worse.
Stop participating in two federal tax breaks for investors, the 1031 exchange and O-Zone investment plans that benefit certain of the investor class over regular taxpayers. 1031 exchanges allow an investor in real estate to sell it and buy other real estate without paying taxes on their gains. The O-Zone investors “deal” will be even more generous and easily used, allowing up to three different capital gains tax breaks for investors. Oregon has long held that all income should be taxed the same, whether from work or investments. Both of these provisions fly in the face of our values. Oregon could decide to disconnect from these federal provisions. Taxpayers would still get the tax breaks on their federal taxes, but not on their Oregon taxes.
We have discussed these ideas with legislators, the governor, and coalition partners. Bills are being written for each. The commercial and industrial property tax change must be referred to the voters as a constitutional amendment, since we would be changing the constitution. But actually, we assume that nearly any tax increases the legislature approves will end up on the ballot. Even if many businesses agree to these or other proposals, some other party may fund a ballot campaign.