Byline: David Steves The Register-Guard
It would give Oregon's biggest earners the same percentage tax cut that their workaday counterparts receive. It would reduce revenues collected by the government by billions of dollars over the next few years.
It's Measure 59, which would lift a cap on how much federal taxes can be deducted from state income tax returns. The measure is being pushed by veteran initiative advocate Bill Sizemore and other conservative activists. It's nearly identical to a measure Sizemore pushed un successfully in 2000.
Measure 59 is drawing a similarly robust coalition of opponents, including teachers and other unionized public employees, nonprofit organizations, religious associations, and health care, education and environmental groups. Associated Oregon Industries, the Oregon Business Association, the Oregon Business Council and the Portland Business Alliance also have jointly come out in opposition to Measure 59.
Senate President Peter Courtney said it's going to be tough enough to balance the state's budget for education, public safety, health care and human services, thanks to the financial meltdown and rising unemployment, and what that will mean for income tax collections.
"We're going to have to rebalance the existing budget as it is because of the downturn of the economy," said Courtney, D-Salem. "So if 59 passes, combined with everything else, it's going to be bad. It's a big hit."
Estimates vary, depending on assumptions about federal tax laws that determine how much Oregonians can deduct. The Oregon Center for Public Policy, a think tank that studies how tax-and-spend policies affect poor and working people, has estimated a $1.1 billion hit in 2011-13. The nonpartisan Legislative Revenue Office has projected a $1.9 billion hit in that period. A committee of public officials has pegged the impact at $2.4 billion in an estimate in the state Voters' Pamphlet.
The Legislative Revenue Office has estimated a loss of $1.14 billion in the next spending cycle, 2009-11, when Measure 59 would be phased in. That would reduce the state's general fund and lottery budget by 7.5 percent. It would be up to the next Legislature to apportion the reductions.
If spread across the board, public schools would be cut by about $470 million; colleges, universities and other education programs would forgo nearly $150 million; human services would lose $258 million; and the courts and public safety programs would face cuts of about $180 million.
Russ Walker, vice chairman of the Oregon Republican Party and a petitioner, along with Sizemore, for Measure 59, said it's a mistake to view the initiative as simply wiping out billions of tax dollars. After all, those dollars don't vanish but rather remain with taxpayers.
"There's plus-one billion dollars that will go directly to the economy," Walker said of the biennial effect of Measure 59. "I don't know what economists they're listening to, but I've never heard an economist say that putting money back in the economy is not a good idea."
Measure 59 would abolish Oregon's cap on the amount of federal income taxes that can be subtracted from state returns. …