Oregon Fiscally Flies With Her Own Wings!
Chuck Sheketoff
Today’s Oregon Senate vote to end the practice of letting Congress dictate the definition of taxable income in Oregon ("rolling reconnect;" see this and this) is a great example of the fiscally responsible, prudent policies Oregonians are demanding out of Salem.
On the eve of Oregon’s 150th anniversary, we have reaffirmed Oregon’s motto, “She Flies With Her Own Wings.” The legislature will now make affirmative decisions about which federal tax law changes to follow and which are not in Oregon’s interest. We will fly with our own wings, rather than be dragged along by Washington, D.C.
Those who voted for the bill should be commended for returning Oregon to the fiscally responsible practice of choosing which federal law changes to connect to. And legislative leadership, including the chairs of the House and Senate revenue committees, Phil Barnhart and Ginny Burdick, should be congratulated for moving the bill in a timely fashion.
Without HB 2157, Oregon automatically adopts any federal changes to the definition to taxable income. If a change lowers taxes paid to Oregon and the legislature doesn’t like the policy, they have to “disconnect,” often requiring a three-fifths vote.
Under HB 2157 Oregon will now decide which changes to the definition of federal taxable income it makes sense to follow, by affirmatively voting to connect to the change with a simple majority. Therefore, it leaves choices that would reduce Oregon revenue on equal footing with choices to protect schools, health care and other key public services.
Besides ending rolling reconnect, HB 2157 updates Oregon’s connection to the federal income tax code to December 31, 2008, picking up all changes made by Congress since the 2007 state legislative session.
Oregon faces a large revenue shortfall and difficult choices, but today’s vote restores control to Oregon in making those tough decisions. Governor Kulongoski is expected to sign the bill tomorrow.
Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.
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connect with blueoregon
Feb 12, '09
Could you follow this up with some concrete proposals, since the leg. seems to be headed toward an early departure? I mean, beyond the immediate concrete stuff, how should we use the new latitude? Would love to hear it.
8:15 p.m.
Feb 12, '09
Now that the Democrats are going to have control over the federal tax laws for at least two years and probably more, you couldn't pick a worse time to disconnect from the upcoming federal changes. Now it will take a vote to disconnect from the tax laws the way they were when Bush left office. Hold the champagne.
Feb 12, '09
Hold the champagne... but more importantly hold on to your wallets! ;-)
10:26 p.m.
Feb 12, '09
Zarathustra - first and foremost we should not connect to the bonus depreciation provision in the stimulus bill. Next, we should look at the other tax cuts and decide which to connect to. The credits, such as the Making Work Pay Credit, are below the line (not part of definition of taxable income), so pre- and post-HB 2157 we need to make a decision whether to connect or not.
If Obama makes good on his campaign promise to reduce taxes for the vast majority of taxpayers, connecting to those changes will be easy, except in so far as they worsen our revenue problem.
What really needs to happen to fully level the playing field is repeal of the "power to the minority" three-fifths rule for a "bill for raising revenue." That's what progressives ought to be demanding.
Feb 12, '09
What's unfortunate, is that these kind of poorly thought-out, impulsive actions by the majority are confirming they really are in over their heads. And their incompetence is bringing mounting discredit to our Party. These are not people who have close to the leadership skills we need in these difficult times. Many of them ran for the wrong reasons without a clue what it means to govern. When I called several of their offices for the kind of specifics Zarathustra requested, no one could tell me. They are just pursuing the childish, egotistical puffery of disconnecting, but are absolutely incapable of fulfilling the responsibility that demands. It would just be sad if the economy weren't in such bad shape.
9:38 a.m.
Feb 13, '09
What really needs to happen to fully level the playing field is repeal of the "power to the minority" three-fifths rule for a "bill for raising revenue." That's what progressives ought to be demanding.
You are referring, Chuck, to the constitutional amendment approved by the voters requiring a three-fifths majority of both houses of the legislature to increase taxes.
As a Republican, I would like to encourage Democrats to please put a repeal of this on the ballot for November, 2010. It would help us determine if Oregon really is a True Blue state, after all.
Feb 13, '09
Jack, "You are referring, Chuck, to the constitutional amendment approved by the voters requiring a three-fifths majority of both houses of the legislature to increase taxes."
2 things:
It is time for a legal decision (court decision if that is necessary) to once and for all decide if ending a tax break is "increasing taxes". Then, if the decision is that yes, ending a tax break is increasing taxes, we would know what is law and what is rhetoric and could act accordingly. As I recall, the Tax Expenditure Report (listing all tax breaks) was ordered to be printed with the budget about the same time as the constit. amendment you mention. It is time to open up that report and debate every single tax break. Then, if need be, ask every legislator to openly defend the tax breaks they believe in. And say what they would do to pay for those breaks. For instance, the "Better Oregon" ( or whatever name) tax break costs X dollars. What do the supporters of the tax break intend to cut to pay for that? Are there enough legislators willing to cut spending to save that tax break?
As I recall, the 3/5 measure was passed in the 1990s. How many 2008 voters were registered/voted in that 3/5 measure election? Are all those who registered to vote since then obligated to support something they didn't vote on? How many of those folks are not registered with a major party?
From your last paragraph, it sounds like you don't believe the saying that the fastest growing party is no party at all. Measure 65 didn't pass, but do Republicans expect to win elections by saying everyone who doesn't agree with them is a partisan Democrat?
12:24 p.m.
Feb 13, '09
LT, I certainly don't think Republicans can win elections by partisan attacks on Democrats (and I actually voted for Measure 65). But that still doesn't keep me from rooting for Democrats to self-destruct. Based on our recent track record, that may be the best chance Republicans have of winning in this state.
Feb 13, '09
Sheesh, You dems vote the state stimulus piece of crap bill into law, but call shit on Obamas? Consistent much? Face it, you are all about revenue, THAT'S IT! Everything you are doing will screw Oregon employment and insure again that we are the last state to recover. It's nice to know that there is no recession for state workers, unions, and pers folks. 8 percent guaranteed on their 401k's, no layoffs, no salary cutbacks, best in the freaking world bennies. Just keep taking my money at the point of a gun. Nice.
Feb 13, '09
ddave, I think Chuck, in his answer, pointed out that would be a downside to manage to.
I do appreciate hearing that "point of a gun bit". When I worked in state gov, when someone would say, "why not just spend, we've got the money", and I would answer, "because it was taken from retirees on threat of violence?", and would get a look like I was the most anti-social thing they had seen since Charles Manson. After a while, you start to think you are barking mad. As I am still recovering, it helps to hear people say it
Feb 13, '09
The new strength of the Demacratic Party Line reminds me of Thomas Jefferson's statement that "A Democracy is nothing more than mob rule, where 51 precent of the people may take away the rights of the other 49." The brainless passage of HB 2157 confirms Jefferson's observation.