This is what I'm talkin' about ....
Tax increases pass Oregon House; Senate OK expected
By Jeremy Lang, The Oregonian
June 09, 2009, 8:25PM
SALEM -- Oregon House Democrats flexed their political sinew Tuesday, rolling over Republican opposition to approve a double shot of tax increases on businesses and upper-income earners.
The leader of a prominent anti-tax group immediately vowed to refer at least one of the measures to voters.
The higher taxes, expected to be ratified by the Senate today, offer a combined infusion of $733 million to help balance a 2009-11 state budget that has been walloped by the recession.
The votes showed Democratic leaders are serious about wrapping up business before the end of the month, and they demonstrated the dominant role the economy has played over the past five months at the Capitol.
"This is one of the defining moments of this legislative session," said Rep. Dennis Richardson, R-Central Point, who opposed both measures. By boosting taxes in the depths of a recession, Richardson said, lawmakers are sending a message that state services take precedence over struggling businesses and successful taxpayers.
Tax bill highlights
• Personal income taxes:
House Bill 2649 raises rate to 10.8 percent for taxable income above $125,000 for single filers, $250,000 for households for tax years 2009-2011, then drops to 9.9 percent.
Raises rate to 11 percent for taxable income above $250,000 for single filers, $500,000 for households.
Raises an estimated $472 million for 2009-2011, less in later years.
• Corporate taxes:
House Bill 3405 creates sliding scale: $150 for corporations with Oregon sales of less than $500,000, up to $100,000 for sales of more than $100 million.
Increases corporate income tax rate to 7.9 percent for income above $250,000 for 2009 and 2010, and to 6.6 percent for income below $250,000.
Top rate drops to 7.6 percent for 2011.
Raises an estimated $261 million for 2009-2011.
But Democrats said the changes would force big corporations and the wealthy to contribute their fair share to a system they need and use as much as anybody, whether it's Oregon's universities or state campgrounds. And the extra money, they said, would prevent more teacher layoffs, court closures and cuts to programs for the underserved.
"Today we are asking a fortunate few to help Oregon out of a very tough spot," said Rep. Phil Barnhart, D-Eugene.
Barnhart and other Democrats were unfazed by Republican warnings that the higher taxes would lead to more job losses and prompt a high-income exodus from Oregon. In fact, they came close to ridiculing concerns that the taxes would hurt those it targets.
Rep. Chris Edwards, another Eugene Democrat, compared the monthly price of the increases to "a couple of videos and late fees" and "a quick trip to KFC."
But Rep. Bill Kennemer, R-Oregon City, said Democrats were just looking for a chance to pass a tax that someone else pays. "It smacks a little of class envy and redistribution."
House Bill 2649 establishes a new, higher tax bracket of 10.8 percent on income above $125,000 for single filers and above $250,000 for households. A rate of 11 percent would apply to households above $500,000.
The current top tax rate is 9 percent. The new rates would raise an estimated $472 million over the next two years.
The other measure, House Bill 3405, hikes taxes on corporations. Under the bill, Oregon's $10 minimum tax on corporations would change to a sliding scale between $150 and $100,000, depending on revenue. It also would set a rate of 7.9 percent for corporate income above $250,000, dropping to 7.6 percent after 2011.
The higher corporate taxes would raise an estimated $261 million over the next two years.
Although the outcome was expected, hints of intrigue reverberated around the Capitol. Russ Walker, director of Oregon FreedomWorks and vice chairman of the state Republican Party, promised to target at least one of the taxes for a citizen referral, most likely the increase on high income earners.
Walker also vowed to punish two Republicans who provided crucial votes to pass the bills -- one of whom suggested he got movement on a favored bill in exchange for his vote.
Rep. Bob Jenson, R-Pendleton, provided the necessary 36th vote to pass the corporate tax increase. Rep. Greg Smith opposed that bill but joined Jenson in supporting the increase on individuals.
The Republican votes were needed because one Democrat, Rep. Mike Schaufler, of Happy Valley, balked.
Walker said Smith and Jenson betrayed their Eastern Oregon constituents. "I swear to God they will not come back to this building."
Jenson called his vote "difficult," but said the state desperately needs the money. "We're in between a rock and a hard place."
He said he's not worried about being challenged, adding he wouldn't mind going back to retirement. He said he did not ask for favors in exchange for his vote and was not offered any.
Smith, however, acknowledged wheeling and dealing. After being stalled all session, a bill he supports that extends a personal property tax exemption for logging equipment suddenly appeared and was voted out of the House Revenue Committee agenda Tuesday afternoon.
"I've been working with the speaker and he's been quite generous," Smith said about House Speaker Dave Hunt, D-Gladstone. "Part of what I needed to cast my vote was to protect my loggers back home."
Hunt said Smith and Jenson voted for the tax increases in part because they serve on budget committees and have a close-up view of the state's money troubles. The logging bill, he said, is "good policy."
The two tax bills are on a fast track. Democratic leaders expect no trouble in the Senate, where Democrats control the 18 votes needed for passage.
Pleased by the votes, Gov. Ted Kulongoski said the measures "will not solve our budget shortfalls, but they will help thousands of Oregonians during this very trying economic period. ... I look forward to signing these measures into law."
