The Oregon legislature is considering two bills right now to reconnect our state tax code to the federal tax code retroactive to 2010 – House Bill 2535 and Senate Bill 301. Why is this important?
For tax year 2010, Oregon companies will be forced to keep two sets of books in order to comply with the drastically different state and federal tax codes. The federal tax code contains several items designed to help Oregon companies grow and invest. Oregon’s code does not. Oregon businesses would not have the ability to take advantage of some of these job-creating federal provisions on their Oregon taxes.
Benefits to Oregon companies and their employees:
• Federal law allows immediate expensing for up to $500,000 in capital purchases. Oregon law only allows for $134,000. New capital investment means new jobs!
• For brand new start-up businesses, federal law allows up to $10,000 in immediate expensing for start up costs. Oregon only allows $5,000.
• Federal law allows immediate up-front depreciation of new assets, allowing more deductions upfront. Oregon does not.
Each of these federal tax provisions is in place to encourage new job-creating capital investment as well as new business start-ups. Oregon’s tax code needs to follow suit.
The policy of keeping Oregon tax law connected to the federal IRS code serves both individual and business taxpayers well in terms of the costs and ease of compliance as well as giving Oregon companies the maximum ability to invest in new capital equipment and the jobs they provide!