PUBLIC HEARING

HB 2469, 2542, 2629

 

TAPES 78-79 A

 

HOUSE REVENUE COMMITTEE

MARCH 15, 2005   1:00 PM   STATE CAPITOL BUILDING

 

Members Present:                      Rep. Tom Butler, Chair

                                                Rep. Vicki Berger, Vice-Chair

                                                Rep. Mark Hass, Vice-Chair

                                                Rep. Brian Boquist

                                                Rep. Sal Esquivel

                                                Rep. Larry Galizio

                                                Rep. Betty Komp

                                                Rep. Andy Olson

                                                Rep. Chuck Riley

                       

 

Witnesses Present:                      Paul Phillips, Smart Growth Coalition

                                                Don Lance, Tax Director, Monaco Coach

                                                Bill Linden, Oregon Metals Industry Council

                                                Lincoln Cannon, Oregon Forest Industries Council (OFIC)

                                                Karey Schoenfeld, Tax Section, Oregon State Bar

                                                Mark Huglin, Tax Section, Oregon State Bar

                                                Jody Wiser, Tax Fairness Oregon                                               

 

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Lizbeth Martin-Mahar, Economist

                                                Kristi Bowman, Committee Assistant

                                               

 

TAPE 78, SIDE A

002

Chair Butler

Calls meeting to order at 1:06 p.m.

 

 

 

OPENS PUBLIC HEARING FOR HOUSE BILLS 2542 AND 2629

 

 

 

025

Paul Phillips

Testifies in support of HB 2542. The bill would allow businesses to remain competitive and prevent unnecessary duplication of reports. Discusses the need to connect to the American Jobs Creation Act of 2004, especially with the Deduction for Income Attributable to U.S. Production Activities. States that Oregon’s economic health is dependent on manufacturing jobs that would be adversely affected by a disconnect to the Jobs Creation Act.

 

 

 

056

Don Lance

Testifies in support of HB 2542 in order to eliminate uncertainties when filing quarterly tax estimates and returns. Discusses connecting to all elements of the bill rather than disconnecting from certain components, e.g., the domestic manufacturing deduction. Having an automatic reconnect to federal tax code will provide consistency for all businesses.

 

 

 

 

 

150

Bill Linden

Testifies in support of HB 2542 and recommends to fully connect to the federal tax code. His organization supports reconnecting to the domestic manufacturing deduction because it encourages more investment in domestic manufacturing.  

 

 

 

182

Chair Butler

Asks how the domestic manufacturing deduction affects the Oregon Metals Industry Council members, and how many employees are affected.

 

 

 

184

Linden

Responds that the members see it as an incentive to increase their production capability, and it is a trade-off for the phase-out of the extraterritorial income (ETI) deduction at the federal level. About 60,000 employees are in the metals industry in OR.

 

 

 

223

Rep. Galizio

Asks Phillips about his earlier statement that opposing a full reconnect is approval for taking jobs overseas. Comments about the federal subsidies for prescription drug plans not covered by company insurance plans that will have a revenue impact for Oregonians.

 

 

 

236

Phillips

Clarifies that his testimony was specific to the manufacturing industry and did not include the pharmaceutical issue. Adds that he supports a full reconnect.  

 

 

 

257

Rep. Hass

Comments that it is his understanding that Nike would not receive benefit under the qualified production component.

 

 

 

258

Phillips

Clarifies previous testimony given about Nike.

 

 

 

274

Lincoln Cannon

Testifies in support of HB 2542. Paraphrases from written testimony (Exhibit 1). Discusses the differences of federal and state amortization on forest land. The problem with not reconnecting is that it would force owners to create two sets of books. HB 2542 is a balanced compromise and comments that it is good tax policy to reconnect.

 

 

 

311

Chair Butler

Asks what other components would affect Cannon’s organization, the OFIC.

 

 

 

313

Cannon

Comments that the ETI and domestic manufacturing deductions would also affect his members. It would be a competitive disadvantage not to reconnect.

 

 

 

333

Phillips

Comments on the Revenue Estimates of the Major Components of Federal Legislation table (Exhibit 15 from 03/09/05). ETI and the manufacturing tax break affect Monaco Coach.

 

 

 

357

Chair Butler

Asks about the number of Monaco employees in Oregon.

 

 

 

360

Phillips

Responds there are about 1400 Monaco employees in Oregon. Overall sales are $1.4 B; roughly half of those are in Oregon.

378

Chair Butler

Asks Phillips if the weighted sales factor passed in the 2003 legislature helps Monaco with filing returns in multiple states.

 

 

 

380

Phillips

Responds that the weighted sales factor will be advantageous to Monaco when fully phased-in (in 2008) given the multistate competition that Monaco has.

 

 

 

400

Karey Schoenfeld

Testifies in support of HB 2542 in order to prevent a high number of amended tax returns. A rolling reconnect is very important to accountants.

 

 

 

OPENS PUBLIC HEARING FOR HOUSE BILL 2469

 

 

 

TAPE 79, SIDE A

030

Mark Huglin

Testifies in support of HB 2469 because it allows the deferral of taxation until the death of the surviving spouse. The Oregon Bar Assn. is a sponsor of the bill.

 

 

 

052

Martin-Mahar

Refers to Staff Measure Summary (Exhibit 2) and Revenue Impact Statement (Exhibit 3). The bill will expand the definition of what is special marital property. 

 

 

 

087

Schoenfeld

Testifies in support of HB 2469 because it will fix current state law by deferring the estate tax until the death of the surviving spouse and can use those funds for health care or care of minor children. It will also provide the surviving spouse to make changes or corrections to their will or trust without having to go through an attorney.

 

 

 

CLOSES PUBLIC HEARING FOR HOUSE BILL 2469

 

ADDITIONAL INFORMATION FOR HOUSE BILL 2542 (PUBLIC HEARING STILL OPEN)

 

129

Jody Wiser

Submits informational handout (Exhibit 4) to committee members regarding which states have disconnected from federal tax code.

 

 

 

133

Martin-Mahar

Refers to HB 2542 Reconnect to Federal Law Changes handout with updated changes (Exhibit 5). Discusses reconnect tax components of amendments 2542-1 and 2542-2 (see testimony on 03/09/02).

 

 

 

CLOSES PUBLIC HEARING FOR HOUSE BILLS 2542 AND 2629

 

201

Chair Butler

Adjourns meeting at 1:50 p.m.

 

 

Tape Log Submitted by:

Reviewed by:

 

 

 

Kristi Bowman, Committee Assistant

Kim Taylor James, Committee Coordinator

 

 

Exhibit Summary:

  1. 1.      HB 2542, Testimony, Cannon, 1 pg., 03/15/05
  2. 2.      HB 2469, Staff Measure Summary, Martin-Mahar, 1 pg., 03/15/05
  3. 3.      HB 2469, Revenue Impact Statement, Martin-Mahar, 1 pg., 03/15/05
  4. 4.      HB 2542, Handout: “Decoupling” State Estate Taxes from the Federal Estate Tax, Wiser, 2 pp., 03/15/05
  5. 5.      HB 2542, Handout: Reconnect to Federal Law Changes, Martin-Mahar, 7 pp., 03/15/05