Oregon Approaches the Rocky Shore

Governor Kate Brown recently signed Oregon Senate Bill 1528, a bill which disconnect Oregon’s State income tax from the new federal tax reform bill. Oregon’s Legislative Revenue Office, a permanent non-partisan legislative service agency which provides unbiased research and analysis on tax policy for Oregon, estimates that Oregonians will save $1.5 billion dollars annually in federal income tax payments as a result of federal tax reform, with 70% of taxpayers paying less federal income tax, 20% paying the same income tax, and 10% paying more in federal income tax. In addition, while the state of Oregon will take in a bit less in state income tax as a result of federal income tax reform for a year or so, state income tax revenues will increase significantly in the next few years as a result of this legislation.


 An important part of federal tax reform is business tax relief. Corporate income tax rates have been significantly decreased. To help small business, federal tax reform will allow small businesses that make up to $318,000 a 20% deduction before paying taxes. For example, a business that makes $300,000 will be able to deduct 20%, or $60,000, therefore paying federal income taxes on $240,000 instead of $300,000. It is anticipated that many small business owners will use the tax savings to buy new equipment, improve training, raise wages, or hire new employees.

 

Decades of Fiscal Mismanagement Have Created Our High Cost Government

If Oregon had incorporated the federal income tax relief for small businesses into Oregon’s tax code, our hard working small business owners would have been able to use their tax savings to grow and expand their businesses. However, Governor Brown, Senate President Courtney, and Speaker Kotek are well aware that Oregon’s high cost government cannot afford tax relief for Oregon’s small business, leading to the creation of Senate Bill 1528. Decades of fiscal mismanagement, created by an ever increasing government workforce given unaffordable medical and retirement benefits, increasing government programs that do little to encourage independence over dependency, and carelessness with the people’s money as exemplified by the hundreds of millions of dollars wasted on a Columbia river crossing not built, and the failed Cover Oregon computer system debacle, have created our high cost government.


Despite record government tax revenue, we face budget deficits as early as the 2019-21 biennium. Significant tax increases will be proposed and certainly passed, if the Democrats obtain supermajority majorities in the House and Senate, and if Governor Brown is re-elected. However, the real calamity will occur when the next recession occurs.

What Can Be Done? Elect New People

A significant downturn in our national economy will lead to a significant drop in state government revenue with little to no ability to reduce government costs. This will lead to massive tax increases, and some painful cuts in government programs. During our last recession, Governor Kitzhaber was able to obtain $1.9 billion dollars in federal revenue, which was used to plug our budget deficit, in exchange for the promise of reducing Oregon’s Medicaid spending. This maneuver to obtain federal revenue is not likely to be able to be used again.


What can be done? Elect new people. Career politicians such as Governor Brown, Senate President Courtney, and Speaker Kotek have brought us this impending fiscal disaster, and new people, with new ideas, and new courage, are desperately needed to reform and remake our State government. This is the goal of our term limits proposal. Replace failing legislative leaders, nearly impossible to defeat in elections due to the huge advantages of incumbency, with proven community leaders from private life, and create a system that turns over legislators on a regular basis, just as we turn over our President and Governor on a regular basis. SUPPORT REASONABLE TERM LIMITS ON OREGON’S LEGISLATORS!