Oregon Democratic legislators moved forward on two business tax measures Wednesday over the objections of Republicans.
The fight in the House Revenue Committee was also a confrontation in some ways between Gov. Kate Brown, a Democrat, and Republican Rep. Knute Buehler of Bend. He’s hoping to win the Republican primary in May so he can run against Brown in the fall.
The two tax bills were drafted in reaction to the sweeping new federal tax law passed by congressional Republicans in Washington. Oregon automatically connects to several federal tax definitions that affect how much people and businesses pay in income taxes.
The committee approved both measures. Senate Bill 1529 would limit a corporate tax break involving overseas profits. The second, Senate Bill 1528, involves business owners who pay personal state income taxes — as opposed to corporate taxes — on their company’s profits.
The Senate has passed both bills.
The House committee changed the overseas profits bill to direct that the one-time financial gain — estimated to be about $140 million — go toward helping to reduce the state’s huge pension debt.
The committee is following the governor’s plan to use that money as incentives to state and local agencies that pay off their debt more quickly.
But Buehler said that it is “not responsible” to put more money into the pension system without making other changes to reduce the cost of benefits.
As an alternative, Buehler proposed that $50 million of that one-time gain should go toward shoring up the state child welfare system. As he’s campaigned for governor, Buehler’s repeatedly accused Brown of endangering the safety of children in the foster care system.
Democrats countered that this was not a good use of those one-time funds and they voted the bill out of committee over the opposition of all the Republicans.
Buehler tried again on SB 1528, which deals with so-called “pass-through businesses” that are subject to personal income taxes.
He and other Republicans on the panel sought to preserve the additional tax break, saying it will help hard-pressed business owners without causing financial problems for the state.
Buehler offered an amendment to preserve that break — and to implement higher tobacco taxes that could be used to boost funding for the child welfare program.
Democrats also rejected that approach and won on a party-line vote.
“What we are not doing is increasing taxes for small business,” said Rep. Pam Marsh, D-Ashland. “What we are doing is keeping Oregon’s tax system whole.”
All told, SB 1528, means Oregon would pick up about $258 million more in pass-through taxes in the current budget cycle than it would have if the state simply followed the new federal tax definitions.
Both measures now go to the House floor.