Oregon lawmakers appear to be only hours away from the end of the legislature, which is largely deserving of the staggering amounts of money they have approved for affordable housing and housing, wildfire response and recovery, mental health and addiction treatment and infrastructure projects.
However, vulnerable Oregonians and decrepit public institutions are not the only winners of this session. Companies of all sizes and from all sectors, regardless of their profitability during the pandemic, will benefit from the state’s new tax credit, which could collectively save them $ 450 million to $ 600 million and cut state revenues by a similar amount, the state said. evaluate…
The tax cut is available for businesses and sole proprietors who have received bad loans under the Payroll Protection Program. $ 780 billion federal efforts to help businesses keep employees on wages amid the uncertainty of the pandemic. Not only are taxpayer-funded payments tax-free under federal law, Congress passed a regulation in December allowing companies to deduct expenses spent by taxpayers from taxes they might owe on income.
U.S. Senator Ron Wyden, a Democrat from Oregon, pushed for a change in his role as leader of the tax filing committee during 2020 after the IRS and Treasury issued a directive stating that recipients cannot charge public spending to business. expenses. In a press release published in May 2020, Wyden suggested that businesses might not need forgivable federal loans if they lack the added benefit of a potential tax write-off. “Our bipartisan bill will correct this mistake and allow businesses to feel confident using PPP funds to keep their employees busy,” Wyden said. said a proposal that he presented to the Republicans and another Democrat.
Oregon is heavily dependent on income tax revenues and usually automatically reflects federal income tax laws, so soon after the legislature began in January, Democrats debated whether legislation should be enforced that would be necessary to prevent the state from copying Wyden’s federal policies and colleagues. Critics of the double tax break on federal aid payments have called their Wage Protection Program a “double dip.”
“Congress creates these new tax breaks for the wealthy and corporations, and then because Oregon automatically copies the federal tax code, we often copy those same wasteful tax breaks,” Rep. Khan Pham, Portland, said in a March interview. … “This is the money we need for our schools, for bushfire recovery, for rebuilding public health infrastructure.”
House of Democrats proposed tax forgiven loans as income, and Senate Democrats have considered cutting the tax-free regime so that only the first $ 100,000 of the forgiven federal enterprise loan will be exempt from taxes. After a public hearing on May 25 in the Senate Finance and Revenue Committee, during which business group lobbyists and representatives of the chambers of commerce opposed the plan, Democrats abandoned it.
Scott Bruun, director of tax and fiscal policy for the state’s largest business lobbying group, Oregon Business & Industry, cited the state’s latest forecast that projected an additional $ 1 billion in the current budget cycle and another $ 1 billion in 2021-2023.
“To put it simply, the state treasury is full, in fact it is swelling,” Bruun said. He quoted analysis paid by Oregon Business & Industry for the cumulative impact of new business taxes coming into force in the state, including a gross income tax to fund schools. It found that when all of these tax hikes take effect, the tax burden on businesses in Oregon could rise from 40th to 20th.
J.L. Wilson, a lobbyist for the Oregon Chamber of Commerce, said everyone he knows has received a payroll protection loan. “I know what a huge concern the small business community was when the Treasury indicated that it would not allow you to deduct expenses that were paid through PPP loans,” Wilson said. “It shocked our community.”
One opposition to tax breaks who spoke out in favor was Bennett Minton, a volunteer at Tax Fairness Oregon, a group that lobbies for progressive tax policy. Minton said in an affidavit that while forgiven loans are generally viewed as income, “as an incentive for recipients to pay employees and other costs to support the economy, this is sound policy.”
Minton quoted Legislative economists as saying that 83% of wage protection loans in Oregon were no more than $ 100,000, but most of the loans – 74% – went to the remaining 17%. “The richest businesses have received the largest loans and can receive huge tax breaks,” Minton wrote. If lawmakers want to “distribute half a billion dollars, (they) must do so on the basis of fairness, not a special interest clause initiated by lobbyists in Washington,” Minton wrote.
December The Oregonian / OregonLive reported that nearly a third of the $ 7 billion received by Oregon businesses through the Payroll Protection Program at the time went to 1,054 companies, accounting for just 1.6% of the state’s loan recipients. In March, the parent company of the news organization announced he will seek money through the program.
In an interview last week, Sen. Ginny Burdick, a Portland Democrat who chairs the Senate Finance and Revenue Committee, said the big May earnings forecast cited by an Oregon Business & Industry lobbyist was a fatal blow to tax cuts. “The forecast killed it,” Burdick said. “This is bad politics. But it was difficult to justify (change). “
The actual size of tax cuts could change significantly as economists worked with incomplete information when they estimated the loss of income in May: about 40% of loan recipients have not yet asked for forgiveness, said economist Kaitlyn Harger.
Not all Oregonians who receive federal aid for the pandemic receive state tax credits. After lawmakers on both sides expressed interest in a $ 300 million increase in personal income tax, mainly for low- to moderate-income individuals linked to their government incentive payments, The Oregonian / OregonLive reported that the Democrats abandoned this plan by the final days of the session.
– Hillary Borrud; email@example.com; @hborrud