These bills have the effect of raising taxes.
Editor's note: This is the fifth in a multipart series exploring tax measures before the Oregon Legislature during the 2021 session
As short -- less than a page -- bill, HB 2254
, requires addition, in determination of Oregon taxable income, of amount of compensation above $1 million threshold paid by taxpayer to any individual and deducted as business expense. In short, tax deductions won't apply to income over $1 million, at least for the purposes of calculating state taxes.
It's pretty clear that the spirit of the bill -- introduced by Representative Marty Wilde (D-Eugene) -- is to generate extra revenue from "the rich," but it may have the effect of punishing small businesses, because of the way they file taxes. Many small businesses file as individuals and while $1 million is a large annual income for an individual, even a very small business can generate that level of revenue.
The effective part of the bill reads.
There shall be added to federal taxable income the amount of any individual’s compensation paid by a taxpayer that is in excess of $1 million for the tax year and that has been deducted on the taxpayer’s federal return under section 162 of the Internal Revenue Code.
, also introduced by Representative Wilde, is similar. It limits, for purposes of personal income taxation, availability of itemized deductions, using phaseout based on adjusted gross income of taxpayer.
A taxpayer’s itemized deductions are the amount of the taxpayer’s itemized deductions as defined in section 63(d) of the
Internal Revenue Codeshall be reduced by five percent for every $50,000 by which the
taxpayer’s adjusted gross income exceeds $500,000.
In a time of record revenues coupled with a recession focused on small businesses, some think that these proposals are unnecessary and even mean-spirited. Neither bill has been scheduled for a hearing in the House Committee on Revenue, but this committee is not subject to the chamber deadlines faced by other committees.
|Post Date: 2021-03-26 09:39:53||Last Update: 2021-03-20 22:09:38|