SENATE COMMITTEE ON REVENUE

 

January 18, 2005†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Hearing Room A

9:00 AM†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Tapes 3 - 4

 

MEMBERS PRESENT:†††††††† Sen. Ryan Deckert, Chair

††††††††††††††††††††††††††††††††††††††††††††††† Sen. Gary George

††††††††††††††††††††††††††††††††††††††††††††††† Sen. Rick Metsger

††††††††††††††††††††††††††††††††††††††††††††††† Sen. Floyd Prozanski

 

MEMBERS EXCUSED:††††††† Sen. Bruce Starr, Vice-Chair ††††††††††††††††††††††††

 

VISITING MEMBER:†††††††††††††††††††††† Sen. Charles Starr

 

STAFF PRESENT:†††††††††††††††† Paul Warner, Legislative Revenue Staff

††††††††††††††††††††††††††††††††††††††††††††††† Lizbeth Martin-Mahar, Legislative Revenue Staff

James Goulding, Committee Assistant

 

ISSUES HEARD:†††††† ††††††††††† Informational Meeting

††††††††††††††††††††††††††††††††††††††††††††††† Orientation: Personal Income Tax

 

 

These minutes are in compliance with Senate and House Rules. Only text enclosed in quotation marks reports a speakerís exact words. For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 3, SIDE A

003

Chair Deckert

Calls the meeting to order at 9:06 AM. Makes opening remarks to the committee. Notes Senator Charles Starr will be taking the place of Senator Bruce Starr on the committee.

Informational Meeting

Orientation: Personal Income Tax

020

Lizbeth Martin-Mahar

Makes opening remarks on tax documents available for committee members. Begins making PowerPoint presentation on Oregon Income Taxes (EXHIBIT A). Presents committee with a research report on Impact of 1997 Legislation (EXHIBIT B), and Oregon Personal Income Tax Statistics (EXHIBIT C).

046

Martin-Mahar

Begins slide presentation with Oregon Income and Property Tax collections, slide 2.

060

Chair Deckert

Wonders if as corporate taxes rise, personal income tax revenues will increase.

070

Martin-Maher

Replies there is a correlation and that taxpayers would expect to see that happen. Continues with presentation, elaborates on personal incomes taxes and withholding of payments. Discusses General Fund Revenues, slide 3.

108

Martin-Maher

Explains Number of Tax Returns: Tax Withheld, Estimated Payments & Refunds Ė 2002, slide 4. Explains Tax Withheld, Estimated Payments & Refunds Ė 2002, slide 5.

150

Sen. Prozanski

Asks about graph indications on the Withholding Payments slide 6.

170

Martin-Mahar

Clarifies what the graph indications are referring to. Continues presentation with a breakdown of industry and month of tax withholdings index for 1999-2004, slide 7.

200

Martin-Mahar

Discusses industry sectors with a decline in withholdings between July 2001 and October 2002, compared to data from October 2004, slides 8 and 9.

234

Martin-Mahar

Begins second segment of slide show, Oregon Income Taxes, Details on the Personal Income Tax system. Discusses Oregonís tie to federal tax system, page 6.

245

Chair Deckert

Wonders about the implications of disconnecting from the federal tax system, and federal laws that would require Oregon to reconnect.

250

Martin-Mahar

Explains Oregonís disconnect, and how some federal changes will not be implemented in Oregon. Legislature will start a rolling reconnect.

348

Martin-Mahar

Discusses Oregon subtractions, federal income taxes but Oregon does not. This includes Social Security. Explains standard deductions vs. itemized deductions.

360

Martin-Mahar

Discusses trends in Oregonís largest subtractions, page 6. Changes made by U.S. Congress affect Oregon taxes.

380

Chair Deckert

Asks if Oregon is the only state with a special tax deduction for the elderly.

390

Martin-Mahar

Replies that he is correct. Discusses top five Oregon tax subtractions.

450

Martin-Maher

Discusses number of itemized and standard tax returns.

TAPE 4, †SLIDE A

005

Martin-Mahar

Continues discussion of itemized and standard tax returns, page 7.

020

Martin-Mahar

Discusses trends in largest federal itemized deductions, page 8.

040

Martin-Mahar

Continues discussion on top five federal itemized deductions. Top deductions are home mortgage interest and property taxes.

045

Martin-Mahar

Begins discussion on Oregonís personal income tax. Oregonís tax rates are significantly lower than federal tax brackets. Brackets are indexed to inflation.

075

Martin-Mahar

Begins discussion on trends in Oregonís largest credits for tax years 1999-2003. Personal exemption is by far the largest credit.

090

Chair Deckert

Wonders what the aggregate cost of a credit.

100

Martin-Mahar

Replies, aggregate is about $15 million, but that number is declining in 2003.

105

Sen. Prozanski

Wonders how many states provide for credit where some income is earned from other states.

110

Martin-Mahar

Does not know. Federal level also provides credit for those who pay taxes in other countries.

115

Paul Warner

Points out that his research shows all states have some method of preventing double taxation across state lines.

120

Sen. Charles Starr

Questions how Oregon can capture the income for taxes for work done in other states.

125

Martin-Mahar

Replies that taxpayers have to report it themselves. It is difficult to do.

130

Warner

Ensuring compliance for this is one of the toughest tasks for Oregon Dept. of Revenue.

140

Martin-Mahar

Continues with presentation on trends in largest Oregon credits.

150

Chair Deckert

Ponders how many other states have a similar law.

155

Warner

Replies he would be surprised if many states have that law.

160

Martin-Mahar

Moves forward with her presentation on income tax credit trends. Outlines key features of Oregonís earned income and child care credits. Continues discussion on Top Five Oregon Credits Ė Tax Year 2002. The top five credits total 93% of total credits. Next slide gives same breakdown in pie graph.

196

Martin-Mahar

Discusses key features of Oregonís earned income and working family child care credits. Brought into effect in 1997. EIC legislation was to help low-income taxpayers.

212

Martin-Mahar

Explains Table B: Historical Utilization of EIC and WFCC & Federal EIC, slide 23. Some families claim both credits.

266

Martin-Mahar

Graph below table shows credits are tailored to help low income taxpayers. As income grows, credits decrease.

300

Martin-Mahar

Explains Distribution of Tax Returns, comparing 2003 returns to 1990. Provides details of the components of adjusted gross income for 1990.

317

Martin-Mahar

Discusses components of adjusted growth income pie chart. Wages comprise 66.3 percent of total. Compares 1990 AGI with 2002 AGI.

364

Martin-Mahar

Discusses change in major components of AGI tax year 2000 and 2002, slide 28.

390

Martin-Mahar

Summarizes distribution of AGI components with discussion of adjusted gross income in 1990 and 2002, slides 29 and 30. Points out slides that details AGI by county. Illustrates disparity among urban and rural counties.

TAPE 3, SIDE B

018

Martin-Mahar

Continues slide presentation with discussion of check-off donations on Oregon income tax forms.

020

Chair Deckert

Asks about rotation of tax check-off donations from year to year.

025

Martin-Mahar

Replies that some rotate, others are permanent

030

Sen. Prozanski

Asks about how to specify a donation.

040

Martin-Mahar

Responds.

050

Sen. Prozanski

Wonders about taxation of Vancouver, Washington residents that work in Oregon.

055

Martin-Mahar

Responds, tax compliance can be difficult to enforce.

067

Sen. George

Wonders about percentage of total amount of state taxes are paid by those earning $60,000 and above (refer to page 15).

070

Martin-Mahar

Replies, roughly 61%.

075

Chair Deckert

Asks about Oregonís disconnect from federal tax cuts, and what might happen if the Bush administrationís tax cuts were to be made permanent.

090

Martin-Mahar

Responds, Oregon would have less federal tax subtraction, and state taxes would raise.

095

††Warner

Provides more detail.

102

Chair Deckert

Thanks the staff for the presentation. Adjourns the meeting at 10:09 AM.

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee Assistant††††††††††††††††††††††††††††††††††† Reviewed by Kim Taylor James

 

 

 

EXHIBIT SUMMARY

 

  1. PowerPoint Presentation on Oregon Income Taxes, Martin-Mahar,† 21 pp.
  2. Research Report: Impact of 1997 Legislation, Martin-Mahar, 9 pp.
  3. Oregon Personal Income Tax Statistics, Tax Year 2002, Martin-Mahar, 196 pp.