End-of-Session Bill Number Change Resurrects Wealthy Tax Cut and Threatens Popular Government Services

InsideCapitolDome

End-of-Session Bill Number Change Resurrects Wealthy Tax Cut and Threatens Popular Government Services

InsideCapitolDome

End-of-Session Bill Number Change Resurrects Wealthy Tax Cut and Threatens Popular Government Services

News Release

An end-of-session maneuver, called a “gut-and-stuff,” replaced one tax cut bill, Senate Bill 535, with the contents of another, Senate Bill 537-A. The revised bill, Senate Bill 535-B, is on its way to a vote in the State House of Representatives. SB 535-B would increase the amount of federal income taxes subtracted from state taxable income from $3,000 to $5,000. It would take effect in 2001 if voters approve the measure in a referral to the November 2000 ballot. The measure’s primary promoter is Associated Oregon Industries (AOI), a business lobby group.

“This is a tax cut for the wealthy,” said Charles Sheketoff, executive director of the Silverton-based Oregon Center for Public Policy. “On average the poorest 40 percent of Oregonians will receive no tax relief.”

According to a study by the Oregon Center for Public Policy and the Washington, D.C.-based Institute on Taxation and Economic Policy:

  • The 60 percent of Oregon households in the lowest income groups will receive an average tax break of $8 a year.
  • The poorest 40 percent of Oregon households receive, on average, no tax relief.
  • Sixty percent of households will receive just 8 percent of the tax break offered by SB 535-B.
  • The wealthiest 20 percent of Oregon households, with an average income of about $132,000 a year, will reap 57 percent of the tax break and have their tax bills reduced by $166 on average.

“The impact to the state would be phenomenal,” said Sheketoff. He referred to a projection by the Legislative Revenue Office showing that such a tax cut would cost the state $43 million in the last six months of the 1999-01 biennium and as much as $223 million in the 2001-03 biennium, when fully implemented.

Sheketoff notes that the $223 million price tag exceeds the Governor’s Recommended 1999-01 general fund spending for all of the following agencies combined:

  • Oregon Health Sciences University ($107.9 million);
  • the District Attorneys ($9.5 million);
  • the Economic Development Department ($3.4 million);
  • the Employment Department ($4.6 million);
  • the Oregon State Fair ($0.7 million);
  • the Housing and Community Services Department ($19 million);
  • the Department of Veterans’ Affairs ($2.5 million);
  • the entire consumer and business services program area ($12.8 million);
  • the legislative branch of state government ($51 million); and
  • the Commission for the Blind ($1.3 million).

“It is also more than Oregon spends on juvenile justice, welfare, or the state police,” said Sheketoff. “At a time when legislators are negotiating, bitterly, over how to distribute an already limited budget, they are asking voters to limit future budget options in order to benefit Oregon’s most fortunate.”

OCPP

OCPP

Written by staff at the Oregon Center for Public Policy.

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