If You’re Going to Make A Bad Deal, at Least Don’t Make It Open-Ended

Chuck Sheketoff

If You’re Going to Make A Bad Deal, at Least Don’t Make It Open-Ended

Lawmakers today begin deliberation on the “Grand Bargain,” or Grandly Flawed Bargain as OCPP has explained. We've noted that the Governor’s tax package looks to make about $200 million in new investments but only brings in adequate revenue in the current budget period, because of the inclusion of a tax subsidy that primarily benefits the top 1 percent and grows in cost over the next two budget periods.

Should lawmakers push ahead with this flawed package that provides a windfall for some of Oregon’s wealthiest, at the very least they should put an expiration date — a sunset — on the tax subsidy for the wealthy. That would be the responsible thing to do.

There's been talk of adding a "circuit breaker" of sorts to increase the subsidy's preferential tax rates if the revenue lost (cost) is significantly greater than already predicted. While a circuit breaker is important, what's needed even more is a sunset, an expiration date.

The preferential rates make the tax subsidy a tax expenditure as that is defined in state law (ORS 291.201 -- " 'tax expenditure' means any law of .... this state that exempts, in whole or in part, certain persons, income, goods, services or property from the impact of established taxes, including but not limited to ...preferential tax rates").

The 2013 Legislature, not anticipating a special session before January 2014, enacted HB 3367. Section 45 of that bill requires that all tax expenditures enacted on or after January 1, 2014, have a six year sunset.

It would be fiscally irresponsible to make investments in education, mental health care and senior services based on a revenue source that disappears over time. And it would be even more irresponsible not to put a sunset on the tax subsidy that is the cause of the shrinking revenue.

Oregon Center for Public PolicyChuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

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