Revenue reform in order to ensure adequate and stable state services for children, the elderly, and those in need remains a top priority for me. While some steps were taken in 2009 toward this goal, we must continue to improve an inadequate and unstable system.

Principles that I follow in assessing any proposed tax reform include:

1. It must not shift the tax burden away from the wealthy and toward the poor.
2. It must not result in cuts to state responsibilities such as education, health care, and public safety.
3. It must make Oregon’s revenue system more stable and sustainable over time.

I support the following specific measures toward improving our tax system:

• Capping tax giveaways. Out of every $1 of potential income tax revenue, the state gives away $0.45 in credits, deductions, and exemptions – sometimes without any corresponding public benefit. A 10% reduction in these tax breaks would generate as much as $1 billion in new revenue for schools and other vital services. Tax giveaways ought to be given the same level of scrutiny as other government expenditures.
• An end to the kicker. While the personal kicker is considered untouchable and the super-majority requirement likely makes the corporate kicker nearly as difficult to eliminate, I would support the constitutional referral that would be needed to eliminate this bad public policy.
• Revising Measures 5, 50, and 11. Property tax limitations have created a system far too reliant on income taxes, while mandatory minimum sentencing has left us putting criminals before college kids in crafting budgets.
• Larger education and enforcement budgets for the Department of Revenue. Increased auditing and stronger penalties will pay for themselves many times over by bringing more taxpayers in compliance with the law.

Legislative Accomplishments

Reigning in Tax Expenditures – 2011

In 2009, House Democrats passed HB 2067, which created an orderly review process for all Oregon tax credits. As a result, this year twenty credits were up for review. Sticking to a $10 million budget granted by the Ways and Means Co-Chairs, over $30 million in tax expenditures were set aside in HB 3672.

 Kicker as a Tax Credit – 2011

HB 3543, sponsored by Rep. Julie Parrish, stops short of the kicker reform I’d like to see – but it saves the state millions in postage costs by turning kicker refunds into tax credits rather than checks in the mail.

Raising the Corporate Minimum – 2009
HB 3405 raises the minimum tax paid by corporations from $10 to $150. About two-thirds of Oregon businesses currently pay the corporate minimum. Under HB 3405 the corporate tax rate increases to 7.9% on net income over $250,000. The rate drops to 7.6% in 2011 and settles permanently on businesses earning over $10 million per year at the 7.6% rate.
 

Raising the Tax Rate for the Wealthiest Oregonians – 2009
HB 2649 increases the tax rate for households earning from $250,000 to $500,000 from 9% to 10.8%. The bill increases another 0.2% on income over $500,000. In 2012, the rate would permanently set at 9.9% on income over $250,000. Families earning less than $250,000 of adjusted gross income will pay no additional taxes.
 

Rebuilding the Rainy Day Fund – 2009
HB 2073 diverts some corporate tax revenue directly into Oregon’s Rainy Day Fund starting in 2013.
 

Taking a Closer Look at Tax Credits – 2009
HB 2067 allows for an orderly review of certain tax credits not required under federal law or the Oregon Constitution by creating staggered sunset provisions on such tax credits.

Rainy Day Savings Account – 2007
HB 2707 establishes the state’s first ever savings account – a Rainy Day fund that will protect Oregon from drastic cuts in education, public safety, and social services in the event of a recession. This Rainy Day fund is established with a one-time diversion of the corporate kicker.
 

Revenue Reform Task Force – 2007
HB 2530 established a task force to look into various revenue reform possibilities.