Equity Alliance Oregon

The Equity Alliance of Oregon is a group of business owners and business leaders who believe that Oregon’s ongoing prosperity is tied directly to the strength of the middle class and providing real economic opportunities for all Oregonians. We support House Bill 2456 and strongly urge a Yes vote on this bill.

Most of the members of the Equity Alliance will see our taxes go up as a result of the cap on tax deductions for upper-income taxpayers. Everyone should remember that upper-income taxpayers receive the bulk of the benefit from tax deductions today. HB 2456 will partially reduce that preference.

Most importantly, as business leaders, we know that you can’t remain successful if you’re giving away more money than you spend investing in your future. Nothing is more important to the state’s economic health (and the success of every business and family who lives here) than a quality education system, from pre-K through university.

And yet, right now, the state of Oregon is doing a pretty poor job of fostering that education system. Our K-12 classrooms are unacceptably overcrowded. We have one of the shortest school years. State funding of colleges is dwindling, and tuitions are skyrocketing. On many campuses, it’s a struggle just to keep the lights on, let alone provide a quality education for our next generation of leaders.

Over all, Oregon is expected to give away more than $36 billion in tax breaks over the next two years, much of that going to corporations and wealthy households that don’t need the additional help. By finding ways to slow the growth of these tax expenditures, we can redirect those funds into our shared priorities—like investing in our education system so that Oregon will have the highly educated workforce we need to attract businesses to the state.

By lifting the corporate minimum cap on large corporations, we can generate around $50 million for our schools and priority services.  Not only will that free up needed money, it will also correct a deep flaw in our corporate minimum tax. Right now, the cap on the corporate minimum tax means that the very largest corporations doing business here get a tax break that isn’t available to smaller businesses. It’s specifically designed to benefit the biggest corporations at the expense of small businesses. That’s unfair and needs to be fixed.

Additionally, we’re fully in support of the provision in HB 2456 that’s designed to recoup tax dollars hidden in offshore tax shelters. This is a no-brainer, and anyone who opposes it should frankly be embarrassed.

HB 2456 won’t solve all of our state’s problems, but it will help to provide some of the revenue needed to help us reinvest in these key priorities, and it does that by asking for a little bit of help from those of us at the upper end of the income scale.

The business leaders of the Equity Alliance appreciate the work that many members of the House have done so far to close tax loopholes, and we’d strongly urge you to consider much bigger proposals that will fund our schools and make the tax system more fair for everyone.

Sincerely,

Equity Alliance Oregon
equityallianceoregon.com

Chair Barnhart and members of the committee,

Thank you for allowing me to speak today in support of House Bill 2456. My name is Anna Geller, and I’m the owner of an Oregon based Subchapter S corporation – Geller Silvis & Associates, – and a managing member of several LLCs.

I’m here today on behalf of myself and the Equity Alliance of Oregon, which is a group of business owners and business leaders who believe that Oregon’s ongoing prosperity is tied directly to the strength of its middle class and to providing real economic opportunities for all Oregonians.

We’d like to applaud this committee for beginning the critical work of looking for effective ways to rein in some of the billions of dollars Oregon gives away in tax breaks.. Oregonians expect their legislators to be good stewards of tax dollars, and that should apply just as much to the money we give away through the tax code  as it does to the money we spend on schools and infrastructure.

Over all, Oregon is expected to give away more than $36 billion in tax breaks over the next two years, much of that going to corporations and wealthy households that don’t need the additional help. By finding ways to slow the growth of these tax expenditures, we can redirect those funds into our shared priorities—like investing in our education system so that Oregon will have the highly educated workforce we need to attract businesses to the state.

HB 2456 is a modest step in the right direction. In particular, I’d like to speak in support of the provision that caps personal income tax deductions for wealthy households. For the Equity Alliance, this proposal is a common sense approach to the problem. Most of the members of the Equity Alliance will see our taxes go up as a result of this revenue package. But as business leaders, we know that you can’t remain successful if you’re give away more money than you invest in your future. We believe all businesses will prosper when Oregon has the revenue to invest more in education and can grow a stronger, even more skilled, local workforce.

For Oregon, that means investing in our K-12 schools, so that we no longer have the third largest class sizes in the country. It means investing in higher education, so that a college education is actually attainable for the kids of middle-class families, and so that emerging businesses will see partnership opportunities. And it means investing in the basic infrastructure that businesses need in order to create and distribute their products.

HB 2456 won’t solve all of our state’s problems, but it will help to provide some of the revenue needed to help us reinvest in these key priorities, and it does that by asking for a little bit of help from those of us at the upper end of the income scale. This measure preserves tax deductions for the middle-class families who actually need them. But it caps them for those at the very top, who’ve continued to do well even through the ongoing economic crisis. The Equity Alliance believes this is a fair and modest proposal that will eventually benefit everyone

We understand that some charitable organizations are naturally concerned about whether this cap on deductions for wealthy donors would cause them to reduce their donations.  As individuals who would see our taxes go up as a result of this bill, we’d like to tell you that these concerns are mostly unfounded. The bill is designed to only apply to those at the very top levels of income, and it’s phased in to lessen the impact. For instance, a taxpayer with $750,000 in adjusted gross income—that’s more than 16 times the state’s median household income, by the way—would see her taxes go up by just $2,677. In our view, that is not a sufficient amount of money to cause a dedicated donor to change their support of a valued charity.  For someone with three quarters of a million dollars in annual income this is just not a lot of money.

But here’s the biggest reason why this bill won’t affect charitable giving: To the extent that deduction rates influence philanthropic actions, it’s at the federal level. This measure in no way changes the generous federal deductions that wealthy individuals can take that might influence behavior.

In closing, I and the members of the Equity Alliance believe that legislators can and should do much more to raise revenue to actually fund education. HB 2456 is a fair and modest  start towards that goal, but we must do much, much more to find real dollars to invest in our future.

Chair Barnhart and members of the committee,

My name is John Calhoun. I’m an entrepreneur and investor. I am currently CEO of InsideValuation Partners and I’m also the co-chair of the Equity Alliance of Oregon, which is a group of business owners and business leaders who believe that Oregon’s ongoing prosperity is tied directly to the strength of the middle class and providing real economic opportunities for all Oregonians.

As business leaders, we know that nothing is more important to the state’s economic health (and the success of every business and family who lives here) than a quality education system, from pre-K through university. And yet, right now, the state of Oregon is doing a pretty poor job of fostering that education system. Our K-12 classrooms are unacceptably overcrowded. We have one of the shortest school years. State funding of colleges is dwindling, and tuitions are skyrocketing. On many campuses, it’s a struggle just to keep the lights on, let alone provide a quality education for our next generation of leaders.

Oregon needs to do much, much more to invest in our schools. In particular, we believe that Oregon could do much more to make sure that the largest corporations are contributing to our state’s priorities. HB 2456 is a good step in the right direction.

Right now, Oregon is tied for the lowest state and local business tax burden in the entire country. We’ve spent many years in the bottom five of this list, and now we’re at the very bottom. This is from a report by the Council on State Taxation, conducted by Ernst & Young.

I want to give you some perspective about just how low corporate taxes are in Oregon. To just get to the national average business tax burden, we’d need to raise state and local business taxes by $2.5 billion. That would be a 43% increase. If we wanted to match Washington’s business tax burden so that we’re even with our closest economic neighbors, we’d need to raise state and local business taxes by $3.4 billion—a 57% increase.

HB 2456 offers a far more modest proposal. By lifting the corporate minimum cap on corporations with more than $100 million in gross revenue, we can generate around $50 million for our schools and priority services.

Not only will that free up needed money, it will also correct a deep flaw in our corporate minimum tax. Right now, the cap on the corporate minimum tax means that the very largest corporations doing business here get a tax break that isn’t available to smaller businesses. It’s specifically designed to benefit the biggest corporations at the expense of small businesses. That’s unfair and needs to be fixed.

We believe that legislators can and should go much farther with regard to corporate taxes, specifically on C-corps. Here are a couple of ideas:

Increase the minimum tax on C-corp sales from 0.1% to 0.4% which is closer to Washington’s Business & Occupation tax rate. This would generate hundreds of millions of dollars—if not more—for our schools and infrastructure, and no one could claim that we’re worse than Washington.

Another idea is to restructure our C-corp tax rates to mirror personal income tax rates. There’s no reason why C-corps should have a dramatically lower tax rate (6.6%) than individuals or most small businesses. The way our tax system is currently designed, the largest corporations enjoy a lower tax rate, and small businesses have to shoulder more of the burden. Adjusting the C-corp rate to mirror the personal income tax rates would be fairer and it would raise approximately $365 million.

Additionally, I’d also like to add that we’re fully in support of the provision in HB 2456 that’s designed to recoup tax dollars hidden in offshore tax shelters. Oregon should play no part in abetting deadbeats who are trying to avoid payment of legitimate taxes.

In closing, I’d to reiterate that the business leaders of the Equity Alliance appreciate the work you’ve done so far to close tax loopholes, and we’d strongly urge you to consider much bigger proposals that will fund our schools and make the tax system more fair for everyone.