A6
State
Blue Mountain Eagle
Wednesday, February 28, 2018
Senate passes ‘pass-
through’ business tax bill
By Claire Withycombe
Capital Bureau
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The Oregon Senate on
Friday passed a controversial
bill that would prevent certain
Oregon business owners from
claiming a deduction included
in the recent federal tax re-
form law on their state taxes.
But the bill could face a
court challenge if passed by
the House because critics con-
tend the Senate origins of the
legislation violate the Oregon
Constitution.
Oregon’s income tax code
is largely based on the federal
code. Tax deductions created
by federal tax law are avail-
able on state tax returns un-
less those provisions are spe-
cifically disconnected from
Oregon law.
The bill passed by the Sen-
ate would disconnect Oregon
law from a federal deduction
for owners of so-called “pass-
through” businesses, whose
business income “passes
through” to be claimed on
their personal income taxes.
Recent federal tax chang-
es signed into law by Presi-
dent Donald J. Trump allow
owners of those businesses
— such as LLCs and S-corpo-
rations — to deduct up to 20
percent of their income from
their tax return. The bill elim-
inates that deduction from Or-
egon income taxes.
The bill, after more than
an hour of at-times acrimoni-
ous debate in the Senate, now
heads to the Oregon House of
Representatives.
All Republicans present
voted against the measure, as
did one Democrat, Sen. Betsy
Johnson of Scappoose.
Sen. Brian Boquist, R-Dal-
las, says he plans to sue the
state of Oregon over the rev-
enue package.
Under the state’s Consti-
tution, bills for “raising rev-
enue” require a three-fifths
majority vote rather than a
simple majority, and must be-
File photo
The Oregon Senate on
Friday passed a measure
eliminating from state
tax code a deduction for
certain business owners
provided by the recent
federal tax reform.
gin in the House of Represen-
tatives.
Boquist believes the bill
qualifies as a bill for raising
revenue and thus must meet
those guidelines. However, to
date there has been no opinion
from the legislature’s attor-
neys on that question. Boquist
told colleagues on the Senate
floor that he’d requested an
opinion Feb. 14.
Earlier versions of the
legislation laid out broader
tax changes, but the bill was
pared down early this week
in an amendment after what
the bill’s sponsor described as
“general” negative feedback.
Senate Democrats have
cast the amended bill as al-
lowing Oregon to assert its
“self-determination,” in the
words of Senate Majori-
ty Leader Ginny Burdick,
D-Portland, and tout the sup-
port of the pro-business Tax
Foundation for repealing the
deduction.
Opponents of the “plan
argue that this is a tax hike
on Oregon businesses, an
argument that stretches the
imagination,” wrote Nicole
Kaeding, director of special
projects at the Tax Founda-
tion, in a post on the orga-
nization’s website Thursday.
“No business currently re-
ceives this deduction in Ore-
gon; preventing it from exist-
ing in the state doesn’t cause a
tax increase.”
State Sen. Mark Hass,
D-Beaverton, sponsor of the
bill and chair of the Senate
Committee on Finance and
Revenue, contended the de-
duction, when combined with
the favorable state tax rates
for pass-through businesses
that the legislature passed in
2013, would be another give-
away to the same group of
people.
“This bill will not cause
any small business in Ore-
gon to pay one cent more in
taxes than it did last year,”
Hass said in a statement after
the bill’s passage. “The folks
we’re talking about already
enjoy a lower state tax rate
on their net income, and they
just got a 20 percent feder-
al deduction. We’re simply
unhitching the state from
the Trump tax train so they
aren’t double-dipping on the
deduction.”
The move is expected to
allow the state to collect $244
million more in taxes through
mid-2019 than if Oregon al-
lowed the deduction from
state income taxes.
Republicans cast the mea-
sure as a “hit” to small busi-
ness owners in the state and
claimed it would put small
businesses at a disadvantage
compared to larger compa-
nies, which are benefiting
from dramatically lower fed-
eral tax rates as a result of tax
reform.
“Democrats claim that
(the bill) will merely prevent
businesses from ‘double-dip-
ping,’” Boquist said in a state-
ment. “This is wrong.”
According to the Nation-
al Federation of Indepen-
dent Business-Oregon, about
22,000 tax filers qualified for
the preferential small busi-
ness rates in 2016, but there
are about 357,000 small busi-
nesses in the state, most of
which are structured as “pass-
through” entities.
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A bill to expand the types
of health professionals who
can medically release a stu-
dent athlete to play after a
concussion is headed to the
Oregon House.
The Senate unanimously
approved Senate Bill 1547
Feb. 19, and the House Health
Care Committee voted 9 to 2
Friday, Feb. 23, to send the
legislation to a full vote of the
House as early as next week.
Health care committee
members Rep. Knute Buehler,
an orthopedic surgeon, and
Rep. Cedric Hayden, a den-
tist, voted against the propos-
al. The bill also was opposed
by the Oregon Medical Asso-
ciation, Oregon Association
of Orthopedic Surgeons and
the Osteopathic Physicians
and Surgeons of Oregon.
The Senate Health Com-
mittee proposed the law
change, describing it as a
“child safety” bill, after con-
vening a work group on treat-
ment of athlete concussions
and hearing the group’s rec-
ommendations. Under exist-
ing law, only medical doctors,
osteopathic doctors, physician
assistants, nurse practitioners
and psychologists are allowed
to medically release a student
athlete with a suspected con-
cussion. The bill would ex-
pand that authority — with
online training and certifi-
cation — to athletic trainers,
physical therapists, occupa-
tional therapists, chiropractic
physicians and naturopathic
physicians.
Senate passes
‘Equifax bill’
The Oregon Senate has
unanimously passed a bill to
protect consumers when hack-
ers steal their personal infor-
mation from credit reporting
bureaus and other companies.
The legislation requires
companies to notify con-
sumers within 45 days after
discovering a data breach of
their personal information
and prohibits companies from
charging consumers for a se-
curity freeze. A security freeze
is one of the best ways to se-
cure a breached account and
stop identity theft, according
to the Oregon Department of
Justice.
Under Senate Bill 1551,
consumers would be entitled
to place a credit freeze with
each credit reporting agen-
cy for free-of-charge at any
time for any reason. Compa-
nies also would be prohibited
from charging for removal of
a freeze, or a temporary lift-
ing of a freeze. The bill now
heads to the House of Repre-
sentatives for consideration.
Senate approves
change to hit-
and-run law
The Oregon Senate unani-
mously passed a bill Monday,
Feb. 26, that requires drivers
in hit-and-run crashes to re-
turn to the scene once they
learn there was a collision.
The bill, passed unani-
mously in the House Feb. 14,
was spurred by the deaths of
two young girls who were
struck and killed by a vehi-
cle while playing in a pile of
leaves in the street in front of
their house in Forest Grove.
The parents of Anna Di-
eter-Eckert, 6, and her sister,
Abigail Robinson, 11, testi-
fied in favor of the bill in both
the House and Senate judi-
ciary committees earlier this
month.
“In making this change,
someone in the future already
trying to survive their per-
fect storm will not be faced
with what we have had to
go through over the last four
years, years of reliving our
tragedy,” Susan Dieter-Rob-
inson, Anna’s mother and
Abigail’s stepmother, testified
Feb. 6.
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