5 tax bills to watch in Legislature

Associated Oregon Industries
Oregon’s largest business advocate

Here are the tax-related bills that have the attention of AOI and the business community:

HB 3125 extends the machinery and equipment (M&E) personal property tax exemption for bakeries, egg producers, and dairy producers. The bill is sponsored and being pushed by the Northwest Food Processors Association. The M&E personal property tax exemption is already in place for most of the food production industry – vegetables, fruit, seafood, nuts and legumes. HB 3125 captures the remaining 20% of Oregon food producers. Oregon food producers credit Oregon’s M&E exemption with being a key factor in the recapitalization and revitalization of the industry starting in 2005. Employment in Oregon food production has grown steadily over the past decade, even during the “great recession.” Key Oregon food producers are coming forward to talk about how HB 3125 will incents growth and expansion plans in Oregon relative to other states.

HB 3034 appears to effectively repeal the property tax exemption for hospitals and other health care facilities unless these facilities provide a minimum of 15% charity care based on gross revenue. This will prove unattainable in light of new federal health care reforms that have extended Medicaid coverage to significant numbers of previously uninsured Oregonians. HB 3034 would be a significant hit to Oregon’s health care providers.

Gain Share. The Senate Finance Committee passed SB 129 – a thoroughly negotiated bill that extends the life of the state’s Strategic Investment / Gain Share program in exchange for more Gain Share revenue being used to supplement education funding, rural economic development, and Career & Technical Education (CTE) funding. This bill is so critical because the Strategic Investment Program (SIP) is arguably the state’s most important economic development tool. The Gain Share component is also very important because it requires the state to share new income tax proceeds from retained and newly-created jobs to help compensate local government for the property tax abatements they offer under the SIP. Meanwhile, the House Revenue Committee passed HB 2070, a competing bill that puts severe restrictions on the amount of money that counties can recoup from the Gain Share program. This will set up a showdown between these two competing bills in the Ways & Means Committee. AOI supports SB 129.

Tax Havens. There is reason to believe that the House Revenue Committee will take up the issue of tax havens in the remaining two months of the session. HB 2099 expands the list of tax havens to include key U.S. trading partners including The Netherlands and Switzerland. This is an important issue for many foreign companies with an Oregon presence because Oregon’s law allows for the apportionment of income from foreign entities to be subject to Oregon taxation. AOI is on record opposing this legislation and advocating for the removal of The Netherlands and Switzerland from the list of proposed tax havens. Even if the House takes up this legislation, it is uncertain that the Senate will follow suit.

Corporate Taxes. AOI is watching HB 2398 – which increases tax rates on C corporations – that was recently posted for public hearing. However, the hearing never materialized. Still, AOI has reason to believe that there will continue to be a push to raise corporate taxes in this Legislative Session. HB 2398, in its current form, raises the tax rate from 7.6% to 8.6% for taxable income above $1million. Amendments to the bill raise the tax even higher – to 9.6%.

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