Oregon attempt to nullify
Bush tax cut fails

Though anti-tax legislators in the state of Oregon technically failed to stop legislation to nullify some of the tax breaks in President Bush’s recently passed stimulus package, they were able to declare victory anyway when the provisions of the federal bill didn’t match those of the new state law.

Last month, before passage of the federal tax-cut bill, the Oregon House of Representatives passed HB 2186 to “disconnect” Oregonians from specific tax credits and breaks under consideration by federal lawmakers. Under the legislation, many taxpayers would be forced to keep two sets of books since the state definition of “income” for tax purposes would be higher than that used for federal taxes.

Republican State Sen. Jason Atkinson, a leading opponent of the bill, said the House passed the measure “with very little debate.” He told WND the bill’s proponents hoped to push it through “quietly and quickly,” before the federal bill was passed. That way, the move would not be viewed as a tax increase on the residents of Oregon.

Despite opposition by several Republicans, the bill was carried on the House floor by a GOP member, Rep. Lane Shetterly, and supported by the Republican leadership.

When the bill reached the state Senate, Atkinson explained, the opposition grew. According to the Salem Statesman-Journal, a flurry of protest came in from talk-radio listeners who had heard about the proposal.

Though the state Senate is split evenly with 15 Republicans and 15 Democrats, two Republicans voted in favor of the bill, and Gov. Ted Kulongoski signed it into law – before the federal bill was passed, just as proponents had hoped.

The bill’s opponents got the last laugh, however, since each of the specific federal provisions cited in the state legislation were absent from the Bush plan, having been removed before the final version of the bill was signed. The state law, then, “disconnects” Oregonians from federal changes that did not occur.

“There is a sweet irony here,” Atkinson explained. “Those of us who fought against disconnect and fought for economic recovery in Oregon were essentially saved by the U.S. Congress. That’s a first for me.”

Atkinson says the attitude of his opponents is not unique in the U.S. “States just aren’t living within their means,” he said.

If the provisions in the bill had been passed on the federal level, bill proponents claim it would have kept $122 million in state coffers that otherwise would have stayed with taxpayers. Oregon lawmakers are facing a $700 million budget hole in the 2003-2005 biennium budget.

Legislators have proposed various solutions to the state’s budget crunch, including a tax package by Democratic Sen. Kurt Schrader to raise $1.7 billion over the next two years – including a European-style business activity tax, reports the Oregonian. The so-called “value added tax” would go toward education costs. Oregon currently has no state sales tax.