According to a news release from the Speaker's office this morning, the Oregon House took a step toward stable funding for public schools and other vital services on Wednesday as the House Revenue Committee passed an amended version of HB 2456 reducing tax breaks for wealthy households and corporations.
HB 2456 would raise the $275 million in revenue needed to provide $6.75 billion needed to stabilize public education using a balance of adjustments to targeted personal income tax deductions and corporate taxes. The bill will eliminate the personal exemption credit and phase out personal income tax deductions for wealthy individuals and households. Donations to nonprofit organizations will be protected by an exemption for charitable contributions.
The legislation cracks down on off-shore tax havens and removes the arbitrary cap on the corporate minimum tax for Oregon sales over $100 million. The amendment adds a modest increase in the corporate income tax rate to 7.9% on profits over $2.5 million. Currently the affected businesses pay a 7.6% rate.
Only the wealthiest 2.4% of Oregon tax payers will be impacted by the personal deductions caps, and fewer than 3% of corporations would be affected by the changes to rates and the corporate minimum tax cap.
"After many hours of committee discussion and public testimony we have a fair, balanced plan to fund our schools and cut generous tax breaks for the wealthy and a small number of corporations," said Rep. Phil Barnhart (D-Central Lane and Linn Counties), Chair of the House Revenue Committee. "This plan will improve school funding and protect nonprofits while making our tax system fairer for small businesses and middle-class families. Oregon will continue to be among the states with the lowest total taxes."
The bill is the second part of a two-step plan to provide stable funding for public schools and basic services using a combination of reforms to the Public Employee Retirement System (PERS) and reductions in tax breaks. The Oregon Senate passed SB 822, the PERS savings bill last week, and the House will consider the measure next week.
"We've already asked middle class workers and retirees to give a bit through PERS reform," said Rep. Peter Buckley (D-Ashland), House Co-Chair of the budget-writing Joint Ways and Means Committee. "Now we're moving forward to reduce tax breaks for the very wealthiest Oregonians and some corporations. It's the only way we can stabilize, and then reinvest in education."
HB 2456 is expected to come to the House floor for a vote next week.