Federal tax law will bring more than $150 million a year in new taxes to Oregon state government
By Taxpayer Association of Oregon
Most Americans are—or should be—cheering the new tax law. Analysis from the left-leaning Tax Policy Center predicts more than 90 percent of tax filers will pay lower federal taxes under the law.
Nevertheless, Oregon governor Kate Brown described the new tax law a “monstrosity” in a fundraising email.
As chief of a Blue State whose spending outpaces revenues year after year, Governor Brown should be buying bubbly for the Republicans in Congress. They just delivered her a gusher of new tax dollars, according to Mark McMullen, an economist with the State of Oregon.
With the new tax law, the state’s economist predicts an especially big boost: “We’re looking on the order of $150 or $200 million a year in additional Oregon revenue … these are big numbers.”
In testimony before the state legislature, McMullen explained, “There some real strong ties between the federal tax law and Oregon revenues.”
McMullen notes, “In the past, when we’ve seen big federal changes to tax law—in the Reagan era and Bus tax cuts—both of those turned into real significant boosts in terms of Oregon’s own source revenues.”
The new tax law broadens the income tax base by eliminating or reducing deductions for individuals and businesses. Eliminating those exemptions and deductions at the federal level will increase taxable income amounts. Unless states follow suit by reducing their tax rates, the result will be a larger level of taxable income for Oregon taxpayers, McMullen says.
State taxpayers are able to deduct their federal tax payments from their Oregon taxable income. The state’s economist explains that anything that lowers a taxpayer’s federal tax bill also lowers the amount that can be written off of state taxable income. The indirect effect is an increase in the amount the taxpayer owes in state taxes.
The new tax revenues projected to come into Oregon more than to help offset the new taxes on health insurance and health care on the January 2018 ballot. A “no” vote will reject the new taxes. The new revenues from the tax overhaul now make a “no” vote a lot easier to cast.