Oregon Democrats defend tax increase proposal

Dems: Firms and those at higher incomes lose breaks

SALEM — Advocates for schools and seniors on Wednesday praised a plan by Democrats in the Oregon House to raise more tax revenue from businesses and wealthy individuals as House leaders try to build momentum for their plan.

Supporters told a House committee that tax increases would help restore funding for schools and safety-net programs, which have seen their budgets slashed during the Great Recession. House Democrats want to raise $275 million in new revenue, much of it by limiting the amount of money in tax exemptions that high-income taxpayers can claim.

Representatives of nonprofit organizations warn the plan could curtail charitable giving, and a key Democrat later said charities may be exempted. "I stand before you today as one of thousands of teachers in this state who are begging you," Deborah Barnes, vice president of the Oregon Education Association, the state's largest teachers union, told the House Revenue Committee. "This is the time when we have to reinvest in public education in this state."

The Democrats' plan would target individuals earning at least $125,000 a year and joint-filing taxpayers earning at least $250,000. In addition to phasing out their income tax deductions, it would eliminate their personal exemption tax credit, which reduces the tax liability by $183 for every person on a tax return.

For corporations, the Democrats want to tax money held in offshore accounts and increase the corporate minimum tax, which would affect certain businesses earning more than $100 million. "These folks are doing well despite the anemic recovery," said Chuck Sheketoff, director of the Oregon Center of Public Policy, a left-leaning research group.

Representatives of nonprofit organizations asked lawmakers to exempt them, allowing taxpayers to continue deducting all charitable contributions, regardless of their income. The tax benefits of charitable giving are an important incentive for the contributions that allow nonprofit organizations to carry out their mission, said Jim White, director of the Nonprofit Association of Oregon. "Don't kid yourself that this isn't going to have an impact on charitable contributions, because I'm telling you it will have an impact," Roger Martin, a lobbyist for the Oregon Catholic Conference, said.

Some Democrats pushed back, saying their proposal would have no impact on the vast majority of Oregonians, pointing out that charitable contributions would still be deductible from federal taxes.

Later, the House Democrats' chief budget writer, Rep. Peter Buckley of Ashland, said Democratic leaders were open to exempting charitable contributions from their proposed limits on tax deductions.

Republicans and business officials have criticized the Democrats' plan, saying lawmakers should focus on cutting the cost of pensions for government workers. The plan will ultimately need support from at least two Republicans in the House and Senate — assuming all Democrats support it — to achieve the three-fifths supermajority needed to raise taxes.

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