Rep. Berger & Rep. Cameron on Tax Reform & Savings

OREGON’S OPPORTUNITY FOR STABILITY AND ECONOMIC GROWTH
Joint Editorial submitted by Rep. Vicki Berger (R-Salem) and Rep. Kevin Cameron (R-Salem)

As recently as the 2003 Legislative Session, Oregon faced steep declines in revenue that resulted in budget cuts for schools, seniors and state police. Now that we have experience a few years of strong growth, it will be tempting for Oregon’s leaders to spend all revenues available instead of saving for the next downturn.

Oregonians deserve better leadership from the Governor and the Legislature. We need to rebuild trust with Oregonians by demonstrating that we will save during growth years so we do not have to make cuts when the economy weakens.

With a twenty percent increase in General Fund revenues, Oregon must set aside money in a rainy day fund. This is an investment in our future.
House Republicans have worked to create a rainy day fund with sufficient reserves to prepare for future shortfalls. At the same time, we have focused on finding ways to sustain job growth. We have proposed the Oregon Stability and Investment Plan to accomplish both of these objectives.

Our plan provides money for a rainy day fund by suspending the 2007 corporate kicker for C-corporations with annual incomes greater than $500,000. Out of 11,861 corporations who are expecting a kicker credit, 10,972 would receive their entire credit. Only 889 corporations would see their credit deposited into the rainy day fund.

House Republicans are also proposing to restructure Oregon’s “minimum corporate tax” which has not changed since 1931. Our proposal protects small businesses from the larger increases proposed by the Governor and does not affect S-corporations, LLCs or individual tax payers. Our plan reserves 1 percent of the 2007-09 General Fund for the rainy day fund. When combined with the Education Stability Fund, our plan sets aside $817 million this biennium.

Our goal is to have the rainy day fund equal to 10 percent of the General Fund. In addition to mitigating budget shortfalls, this will boost Oregon’s bond rating, allowing the state to borrow money at less cost to taxpayers. The rainy day fund should not serve as a cash machine for legislators looking for a convenient source of revenue. In order to withdraw funds, a two-thirds majority in both the House and Senate should be required.

To promote job creation and investment, the House Republicans are proposing to reduce Oregon’s high capital gains tax rate and increase the inheritance tax exemption. Lowering Oregon’s capital gains tax rate, one of the highest in the country, will encourage businesses to invest in new jobs, facilities and equipment in Oregon. It will also enable middle-class families, seniors and small business owners to keep more of their savings.

By increasing the inheritance tax exemptions, we will protect many family-owned small businesses and farms from the devastating financial costs associated with the owner’s death. Our plan will also bring Oregon in line with the federal exemption, making it less complicated for taxpayers to file their tax returns.

Oregon cannot afford to let another session go by without decisive leadership on these sensible reforms.

Rep. Vicki Berger represents House District 20 which includes West Salem, parts of South Salem and the communities of Monmouth and Independence. She can be reached at 503-986-1420.

Rep. Kevin Cameron represents House District 19 which includes Aumsville, Salem and Turner. He can be reached at 503-986-1419.

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Posted by at 05:08 | Posted in Measure 37 | 6 Comments |Email This Post Email This Post |Print This Post Print This Post
  • iop

    I do thinketh that Oregonians would prefer a cap-gains cut and estate tax cut than to keep the corp.-kicker. The problem is that estate tax is so wrong to begin with. I wish someday we would just eliminate it altogether.

    It makes no sense to tax somebody twice. The death tax taxes someone for spending a lifetime saving, investing, remodeling and building themselves up.

    As to rainy day fund, I asketh what safeguard is there to keep it from being looted unnecessarily during non rainy day times?

  • Wayne Brady

    With the huge increase in revenue this biennium, I see no reason why we should not be saving for the rainy day fund out of current revenue.

    If we take money from the current revenue, that means there will be less spending in the biennium which means a lower starting point for the next one. The trouble the legislature gets into is spending everything when times are good and then finding to their amazement that they cannot sustain that spending level.

    Saving one percent is not going to help much in the next recession. States that had rainy day funds found during the last recession that 10 percent was not enough. Even to get 10 percent you would have to count on the next recession being at least 10 years in the future.

    The goal should be 15 percent and fort this biennium you should be taking 5 percent out of the 20 percent increase for the rainy day fund. That still allows a 15 percent increase. Can’t you live with that?

  • iop

    15% percent of general fund? That is a high number my friend for a rainy day fund.

    Although if they plan to grow the budget at 20% – Goobernor Kulongoski plan, then 15% becomes even more. If they grow the budget less what is coming in, with some to savings then 15% of a smaller budget is a smaller savings. Everything becomes smaller and easier to manage if they just don’t spend every bitty thing that comes in.

  • HappyPacy

    Rep’s Berger and Cameron,

    It is like a breath of fresh air when we have the opportunity to read about a logical and rational economic plan. Unfortunately, we are all so gun-shy of double talk it is hard to trust anything that is said. The only way the Republicans will ever get another foot-hold on the majority in Salem is to strip away any potential spending cover-ups. So, I’d just say, you have a good plan, but will it look anything like you present it by the time it would get through the Democratic Majority.

    Your “investment” component appears to be sound economic policy. Unfortunately, the Dem’s can’t conceive of growing an economy by giving money back, or leaving it with the taxpayers. They have their own dictionary of terms, and their definition of “investment” means the government spending tax dollars. So, don’t let them redefine your plan. It should be non-negotiable. Growing more government does NOT grow an economy.

    I’m very skeptical about the “saving” component of your plan and it all comes down to trust. I simply can not trust any plan that allows the fox to watch the henhouse. If, you chose to keep any revenue windfalls in an emergency fund, I’d doubt that the politicians in Salem would have the political will to stand up to a mainstream media backed “emergency”.

    It would seem the more logical solution to a time of economic growth would be to simply restrain the urge to grow government. Overspending in good times is what causes the problems, not the fact that we have too much money. You know, as well as I, there would not have been a budget crisis if the budget would not have been bloated during the good time.

    The bottom line is…STOP SPENDING in good times and you won’t have such problems covering the budget in bad times!

  • Jerry

    Reducing spending and ceasing the foolish wanton waste of tax dollars would be a much better use of legislative time than some “rainy day” BS.

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