Bills look to lower capital gains rate.
SALEM - With Oregonians hungry for business investment in the state and the jobs it would bring, House Republicans are revisiting a recurrent, business-friendly economic stimulus theme: a capital gains tax cut.
The House Revenue Committee held a public hearing Thursday on three Republican-sponsored bills that would lower the state's capital gains tax rates. The bills - HB 3050, HB 3157, HB 3221 - vary in how significantly they would reduce the tax rate, but their backers agree that the current level of Oregon's taxes on capital gains stunts the state's economy.
"A high capital gains tax rate, as we have in Oregon, discourages people from investing and encourages current investors to hold onto their assets," said House Republican Leader Kevin Cameron, R-Salem. "Reducing the rate will encourage investors to realize their gains, reinvest, and create jobs in Oregon."
Capital gains are any profits brought in by a corporation when it sells a capital asset for more than its initial purchase price. While many other states and the federal government tax capital gains more lightly than other income, Oregon taxes them at the same rate as other income.
Republicans hope to change that this session - although any tax cuts mean less revenue for lawmakers to work with as they try to balance the state's shredded budget.
Rep. Shawn Lindsay, R-Hillsboro, said he believes lower taxes on capital gains might allow the state to poach corporations from states such as Idaho or California, instead of the other way around.
J.L. Wilson, a lobbyist for Associated Oregon Industries, agreed that Oregon is competing for capital in a highly competitive marketplace.
"Absent wholesale tax reform, the best thing the Legislature could do is lower capital gains taxes" to attract more businesses, he said.
While business interests argue that lower taxes on capital gains leads to more private-sector investment, opponents have consistently argued that because Oregon relies so heavily on income taxes for its budget, it can't afford to give any breaks on capital gains taxes, which are expected to generate around $800 million in the coming biennium.
But Democrats have appeared more receptive to the idea in light of the recent economic crisis, and Gov. John Kitzhaber's budget included $25 million in cuts to capital gains taxes if those funds are reinvested into Oregon businesses.
Democratic committee members seemed unconvinced that lowering capital gains taxes would necessarily turn the state into a wealth magnet.
"Taxes are but one factor in the decisions businesses make," said Rep. Tobias Read, D-Beaverton.
Rep. Jules Bailey, D-Portland, stressed that solid infrastructure and good schools could be just as important in terms of luring corporations to the state.
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|Title Annotation:||Local News; House Republicans say the tax cut would encourage investment in Oregon|
|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Mar 11, 2011|
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