The just-concluded Oregon legislative session featured important victories, as well as missed opportunities. The American Rescue Plan Act, enacted by Congress in January, sent billions of dollars to state governments to ease the strain caused by the pandemic. Without a doubt, Congress rescued the economy and spared Oregonians from the budget cuts that have often accompanied recessions. The federal infusion of dollars also made it easier for the Oregon legislature to avoid dealing with long-term structural challenges plaguing our tax and budget systems. Still, the 2021 legislative session inched towards a more equitable tax structure.
Here are some of the wins and misses from the 2021 legislative session as they relate to the Center’s legislative agenda released before the start of the session. To be clear, this is not an exhaustive list of what the legislature did or did not do over the course of the six-month session.
Win: Extending the Earned Income Tax Credit (EITC) to all workers
The enactment of Leave No Worker Behind fixes an injustice in Oregon’s Earned Income Tax Credit — an otherwise excellent tax credit for working families. Leave No Worker Behind was incorporated into House Bill 2433, which passed both chambers.
Up until now, Oregon had been following the federal rules as to who qualifies for the EITC. Those rules exclude workers who file their taxes using an Individual Taxpayer Number (ITIN), often undocumented workers. These are workers who cultivate and process the food we eat, care for our kids and elders, care for us when we become ill – and who perform many other vital roles in our communities. Like other workers, these workers have families to support and bills to pay. But unlike other workers, they have been denied the benefits of the tax credit for families struggling to get by on low wages. Until now.
Together with our key immigrant rights partners Causa and Pineros y Campesinos Unidos del Noroeste (PCUN), the Center played a catalyzing force in the campaign to rid Oregon’s EITC of the exclusion of ITIN filers. Leave No Worker Behind removes the barrier to Oregon’s EITC for a quarter-million Oregonians, many in mixed-status households, including one in 10 Oregon children. Yes, the change is far-reaching.
Win: Paring back the tax break for rich business owners
With the enactment of Senate Bill 139, the legislature pared back a tax break for very rich business owners. The tax break is a set of lower tax rates for certain owners of pass-through businesses that can result in employers paying lower tax rates than their employees. While not everything we hoped for, the bipartisan compromise that was SB 139 eliminated the tax break for profits above $5 million per year and put in additional sideboards to the generous tax break. The reform cuts the cost of the tax break by about $30 million per year, making those funds available to fund schools and other essential services.
Missed opportunities abound
Lawmakers, unfortunately, passed up opportunities for additional meaningful changes. Our partners have pointed out missed opportunities to advance racial justice. And certainly, lawmakers failed to act on legislation that would have protected workers’ rights and improved fairness in our tax system.
Employers who stiff their workers seldom face consequences under Oregon’s current wage and hour enforcement practices. The legislature declined to address this by leaving the Just Enforcement Act as unfinished business. This legislation would have enabled workers to sue their boss for penalties when the state cannot enforce the law.
Tax increases on large, profitable corporations was largely a missed opportunity in the 2021 legislative session. It was encouraging that lawmakers let the Bovine Manure Tax Credit expire, which was sending several million each budget period to agricultural corporations that didn’t need the subsidy. However, there was no serious consideration of significant tax increases on large corporations. This remains a great opportunity for future legislatures.
The legislature also turned down a chance to make it harder for corporations to manipulate the tax system. Corporations with millions of dollars in Oregon profits can currently take advantage of our tax system in secret. A proposal in the 2021 legislative session would have fixed this mistake by requiring large corporations to disclose some financial and tax information to the Oregon Secretary of State. Although this proposal received a strong hearing in the Senate Finance Committee, it did not move forward.
While the 2021 legislature made some progress toward a more equitable tax system, it fell well short of the transformative policy changes we need to ensure all Oregonians live in dignity. We will continue to push for transformative change and hope you will join us.