Major Tax Bills Teed Up
May 29, 2009
Author: CFM Staff
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Lawmakers previewed this week the four tax bills intended to generate $800 million in new revenue to avoid deeper spending cuts in the Democratic leadership's 2009-2011 budget proposal. Only one of them took a step toward passage.
Three of the four showed up in House Revenue, starting with a corporate tax proposal early in the week and including a personal income tax measure aimed at wealthier Oregonians. A hospital and health insurance premium tax that will expand health insurance coverage to 140,000 Oregonians was introduced late in the week and sent on to Joint Ways and Means (see other sidebar for more details).
Senate Finance is looking at deeper cuts in the business energy tax credits than previously approved in the House.
Rep. Phil Barnhart, D-Eugene, and Senator Ginny Burdick, D-Portland, who chair the House and Senate Revenue committees, presented the corporate and personal income tax changes.
House Bill 3405, the corporate tax proposal, which modifies the existing minimum tax and raises corporate tax rates, is estimated to raise around $300 million.
The personal income tax rate increase, dubbed the "Obama tax increase" because of its progressive leaning, would generate $488 million from wealthy taxpayers and, presumably, S-corps and limited liability corporations that are subject to the personal income tax. House Bill 2649 also provides for a 1-year tax exclusion of up to $2,400 in unemployment insurance benefits, the cost of which would be partially offset by a limited tax amnesty program
The hospital and health insurance premium tax is designed to attract $1 billion in federal matching funds and allow the state to insure all children and provide health insurance for 60,000 uninsured adults.
Republicans have expressed concerns about raising taxes during a recession, as well as specific objections to provisions in each of the bills. All three also face the prospect of being referred to voters. Republicans offered an amendment, which was rejected, to send the hospital and health insurance tax to voters.
Democratic leaders express confidence that the major tax measures under consideration would receive favorable votes if sent to the ballot, especially in light of the $2 billion in spending cuts that also are part of their budget plan. And they will be gambling their 36-24 majority in the House and 18-12 edge in the Senate to prove their point, as Republicans have locked up against the measures.
GOP lawmakers say tax increases can be avoided by voiding state employee pay increases and tapping unspent reserves in state agency accounts. The House Republican office released a statement claiming state agencies have a combined $4.9 billion in reserve, of which $3.5 billion is "unreserved and undesignated."
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