Greetings friends,

I hope this newsletter finds you well! We now have about two months left until the Constitutional Sine Die deadline on June 30^th and things are beginning to ramp up! Some of the key issues that have developed are in regards to vaccinations (HB 3063), a commercial activities tax (HB 3427), and cap and trade (HB 2020). HB 2020 has a work session scheduled for May 3^rd. HB 3063 has been voted out of committee and is currently waiting to be moved to the House Floor. HB 3427 is scheduled to be voted on the House Floor tomorrow. For that reason, I will be discussing HB 3427 with you today.

HB 3427 is rooted in the Joint Committee on Student Success, which was originally formed during the 2018 Legislative Session. The Committee, made up of 14 legislators from both sides of the aisle, was tasked with the assignment of visiting schools around the state to discover what is going well in our schools and where they are struggling. They concluded that there are a myriad of factors influencing students’ success – or lack thereof. HB 3427 is the Committee’s attempt at fixing some of the critical issues our schools are facing, but in order to fix these problems the Committee concluded approximately $2 billion needs to be raised per biennium.

Therefore, HB 3427 would create and implement a modified corporate activity tax (mCAT) on commercial activity for all businesses with Oregon revenue exceeding $1 million/fiscal year at a rate of $250 + .57% of income in excess of $1 million. It is considered a modified commercial activity tax because it would allow businesses to deduct 35% of the greater of cost inputs or labor costs.

In order to lessen the impact of this tax on individuals, HB 3427 would also decrease the personal income tax rates beginning January 1, 2020. The tax deductions would be as follows:

• Less than $2,000—5% è75% = - .25%
• $2,000-$5,000—$100 + 7% è $95 + 6.75% = -$5 & - .25%
• $5,000-$125,000—$310 + 9% è $298 + 8.75% = - $12 & - $ .25%
• Over $125,000—$11,110 + 9.9% è $10,798 + 9.9% = - $312

*Note the income thresholds above are for single filers / double that for married filing jointly.

Please note that the proposed mCAT exempts the following:

• Retail and wholesale groceries
• Motor fuel
• Medical Provider Taxpayers
• Credit Unions
• Residential care facilities
• Universal Surcharge money collected and paid into the Universal Service Fund
• Ag Cooperatives
• The amount of current state and federal tax on marijuana
• The amount of current state and federal tax on alcohol
• The amount of current state and federal tax on cigarettes and tobacco
• Non-profits
• Governmental entities

Although our schools desperately need more funding, I have several initial thoughts and concerns about this piece of legislation. First, this is a regressive tax because it hurts the lowest tax bracket. Second, it will hurt high-volume/low-margin businesses, startups, and trade exposed businesses such as agriculture, dairy, and ranching. Third, the bill exempts groceries, but it will not exempt grocers, which will cause a trickle-down price increase for household necessities such as toilet paper or soap. Finally, this is pyramid tax and every time it pyramids the end user will pay for the tax.

If you live in House District 60, I would love to hear your opinion about this bill! Please email my office rep.lynnfindley@oregonlegislature and let me know if this is how you think we should fund our schools!

Finally, two of my bills, HB 2451 and HB 2933 have passed both the House and the Senate! Feel free to click on the links to read more about them. 

As always, if there is anything that I can do to help you, please don’t hesitate to reach out! Enjoy the sunshine!