Earlier this week, legislators in the Oregon House released a plan to raise $275 million by closing big tax loopholes for big corporations and the rich.
The plan is built into the legislative budget, which means that if the bill fails, it’ll mean $275 million less for Oregon’s K-12 classrooms, senior health care, and basic services.
The plan, contained in House Bill 2456, has four basic components. Here’s your handy dandy rundown:
Part 1: Phase out Oregon deductions for households with more than $250,000 in yearly income. (Or $125,000 per year for individuals.) This would create an overall cap on the tax deductions that these households can take on their taxes. It’s simple, fair, and protects middle-class families.
This impacts the top 1% almost exclusively. The rich would still pay a lower effective tax rate than the poor, but the gap would close slightly.
(This idea has such broad appeal that even Mitt Romney supported a version of it last year.)
Raises: $169 million.
Part 2. Eliminate the personal exemption credit for households with more than $250,000 in yearly income. (Or $125,000 per year for individuals.)
The personal exemption credit is a flat $183 credit that everyone gets. But, really, do the wealthiest households need it? Eliminating this credit for the top taxpayers would raise: $38 million.
Closing Corporate Tax Loopholes
Part 1. Lifting the cap on the corporate minimum tax for corporations with more than $100 million in annual sales.
This requires a little explanation: When lawmakers drafted the law that became Measure 67 (increasing the $10 corporate minimum for the first time since 1931), they capped the minimum tax at $100,000 for corporations with more than $100 million in sales. Why? Who knows, but the law as it stands means that the very largest corporations have a lower effective tax rate than small businesses.
That makes no sense from a political or policy standpoint. Lifting the cap and applying a 0.1% minimum tax on all revenue above $100 million would raise: $50 million.
Part 2. Cracking down on offshore tax havens. Basically, if a corporation is sheltering profits in an offshore tax haven as a way of evading Oregon taxes, those profits would be taxed at Oregon’s rate. It’s patterned after something Montana did years ago. As Alina pointed out yesterday, the societal costs of off-shore tax havens are staggering.
Raises: $18 million