Lawmakers convene in special session
SALEM – State lawmakers gaveled in Monday morning for a special legislative session to consider Gov. Kate Brown's proposal to expand an existing business tax break.
The proposal - House Bill 4301 - was the only bill introduced in the House of Representatives.
"We're on the fast track to pass the governor's proposal," said Rep. David Gomberg, D-Central Coast.
Brown, who is seeking reelection this year, called the special session after signing another tax bill in April that was unpopular with the business community. That bill eliminated a 20-percent business tax deduction that was included in federal tax reform earlier this year. Oregon's tax code automatically conforms with federal code unless lawmakers specifically pass legislation to change it.
The governor said while she was considering Senate Bill 1528 from earlier this year, she realized that state lawmakers needed to expand the state's lower tax rate for "pass-through" businesses to sole proprietors.
In 2013, lawmakers approved the lower rate for other "pass-through" businesses, including S-corporations, limited liability corporations and partnerships with certain amount of employment hours and income of up to $5 million per year.
Gomberg and other lawmakers have proposed changes to make the tax break expansion "revenue-neutral "and to focus on on helping only small businesses. Gomberg proposed an amendment that would reduce the income cap to be eligible for the tax break from $5 million to $750,000. Reducing the eligibility cap that amount would make the expansion of the tax break largely revenue neutral, said Chris Allanach, acting legislative revenue officer.
Gomberg's amendment also would reduce the requirement for at least 1,200 employee work hours during a minimum of a 30-hour work week to 1,000 employee work hours. It would eliminate the mandatory 30-hour work week to qualify for the break. The 30-hour requirement excludes seasonal businesses, Gomberg said.
By opening the tax break to seasonal businesses, it would make more geared toward "mom and pop" businesses, he said.
In discussions with the governor's office about his proposal, "there was no real resistance to it, but we're in a time bind," Gomberg said.
A joint committee was scheduled to convene just before 10 a.m. Monday to consider the governor's bill and proposed changes by lawmakers.