Monday, September 1, 2008

OR Measure 59: Creates Unlimited Oregon Income Tax Deduction

OR Elections: SUMMARY: Under current law, personal income taxpayers may deduct a limited amount of federal income taxes when calculating their Oregon taxable income (limit generally is $5500; limit is adjusted yearly for cost-of-living startin in 2008). This measure creates an unlimited deduction for federal income taxes on individual taxpayers' Oregon returns beginning in 2010. Provides "no Oregon taxpayer shall be required to pay to the state, a local government, or other taxing district, an income tax of any kind on money paid to the federal government as federal income taxes." Deduction applies only to federal income taxes paid on income taxed in Oregon; does not apply to corporate excise/income taxes. reduces revenue avaialble for state expenditures; provides no replacement funding. Other provisions.

[_] Yes

“Yes” vote creates an unlimited deduction for federal income taxes on Oregon income-tax returns filed by individual taxpayers; reduces revenue available for state expenditures.

Jack Bogdanski
OR "Family" Council
Victoria Taft

From arguments in favor (pdf):
• Taxpayers Assoc of OR
• OR Tax Payers United
• Americans For Prosperity
[X] No

“No” vote retains current, which allows limited deduction for federal income taxes on individual taxpayers' Oregon income-tax returns (limit generally is $5500).

EMO (pdf): ". . . At a time when additional state revenues are badly needed to fund health care for children, support the construction of affordable housing and extend the state’s earned income tax credit for lower-income working families, it makes little sense to pass a tax credit that will only benefi t wealthier Oregonians. . . ."

Portland Mercury
The Oregonian
Portland Tribune

Basic Rights OR
OR Working Families Party
• Ecumenical Ministries (pdf)
League of Women Voters
NARAL Pro-Choice
Sierra Club
Defend OR

From arguments opposed (pdf, pdf, pdf):
• Gov Ted Kulongoski
• OR Food Bank
• American Heart Assn
• American Lung Assn of OR
• UofO Pres Dave Frohnmayer
• OSU Pres Edward J Ray
• PSU Pres Wim Wiewel
• OR Business Assn
• OR Business Council
• Intel
• Hewlett-Packard
• Nike
• Columbia Sportswear
• Associated OR Industries
• OR Ctr for Christian Values

MY FIRST IMPRESSION: I'll need to hear more arguments about this law. On the surface, it seems reasonable. The state should not tax Oregonians' federal taxes too. However, it seems odd to make state income tax subject to the whims of the ever changing federal tax code.

1 comment:

Anonymous said...

People considering voting for Measure 59 should be aware that the total amount of federal income tax paid is not necessarily the same amount of federal tax that one would get to deducted for Oregon purposes under this measure.

The text of the measure states “This section applies only to (i) federal income taxes paid on income tax subject to tax in Oregon, and (ii) federal income taxes, including capital gains taxes, paid by individuals”.

Some of the differences between income subject to tax in Oregon and income subject to federal tax are: Social Security, Interest from U.S. Government bonds, and Federal pensions.

A separate calculation of the federal income tax would have to be made to determine how much federal income tax is attributable to income subject to tax in Oregon. For example, the federal tax paid on Social Security would not be deductible. It gets more complicated with part-year residents.

My point is that the measure as written is going to raise some issues that the general public may not fully comprehend.