Oregon House Narrowly Votes To Scale Back Hot-Button Tax Break

By Chris Lehman (OPB)
Salem, Oregon June 23, 2017 11:10 p.m.

The Oregon House has narrowly passed a measure meant to scale back a tax break intended for small businesses. The measure cleared the chamber Friday over the strong objections of Republicans.

The tax incentive was created four years ago as a way to stimulate small business growth. But Democrats, including revenue committee chair Phil Barnhart, said it disproportionately benefits doctors and lawyers.


"It's hard to see why wealthy professionals should get a tax deal that working people can't get," said Barnhart, of Eugene.

Related: Oregon Democrats, Governor Say They'll Skip The Corporate Tax Hike

Barnhart said the rewrite of the tax break was done in a way that would protect the kind of small businesses it was meant to help.


But Republicans disagreed. Rep. Carl Wilson, R-Grants Pass, said the measure would harm far more than wealthy entrepreneurs.

"You're going to be surprised at how many of those people you know in your district, except they wear jeans and T-shirts and boots," he said.

The measure was approved 31-28 after a three-hour floor debate. It now heads to the Oregon Senate.

Three Democrats crossed the aisle and voted with the GOP in opposition to the bill. Republicans argued that the proposal actually needed a three-fifths vote for passage, instead of a simple majority. They cited a section of the Oregon Constitution that requires a three-fifths vote for "raising revenue."

Democrats countered by pointing to an opinion issued by the Legislature's attorney, Dexter Johnson. In it, Johnson writes that a 2015 decision by the Oregon Supreme Court set a precedent for treating bills that adjust "the parameters of a tax benefit" as exempt from the three-fifths requirement. Even so, the Legislative Revenue Office estimates the measure would bring in an additional $196 million in general fund tax revenue during the upcoming budget cycle if it becomes law.

The tax break was originally crafted during a three-day special session in 2013 as part of a package of bills that became known as the "Grand Bargain."

Republicans said scaling back the tax incentive meant that Democrats were backing out of a deal that many of them, including House Speaker Tina Kotek, were instrumental in creating. Another key part of the "Grant Bargain," a measure aimed at scaling back public pension costs, has already been tossed out by the Oregon Supreme Court.