Higher income Oregonians would pay $504 million more in personal income taxes over the next two years under a proposal unveiled this week by the chairs of the Senate and House Revenue Committees.  The plan represents the personal income tax component of the $800 million revenue package needed to balance the 2009-11 state budget. The corporate tax increase part of the overall plan was released last week. That plan contained increases in the corporate minimum tax, corporate tax rate, and business filing fees.  

Under the proposal, the top personal income tax rate would be raised from 9 to 10.8 percent for households with incomes of between $250,000 and $500,000 (between $125,000 and $250,000 for single filers). For Oregonians with joint incomes of over $500,000 ($250,000 for single returns), the new marginal tax rate will be 11.0 percent.

Additionally, the deduction allowed on Oregon tax returns for federal income taxes paid would be phased down for joint incomes between $250,000 and $290,000 ($125,000 and $145,000 for single returns). There would no longer be a deduction for federal income taxes paid on joint tax returns showing income over $290,000 ($145,000 for single returns).

In presenting the proposal, Senator Ginny Burdick (D-Portland), chair of the Senate Finance and Revenue Committee, and Representative Phil Barnhart (D-Eugene), chair of the House Revenue Committee, argued that increasing taxes on higher-income individuals would bring more “fairness” to Oregon’s income tax structure.

AOI, along with other business groups, strongly oppose both the personal and corporate income tax increases as imposing too high a tax burden on businesses during a recession and stifling the ability of Oregon’s private sector to recover from the current economic downturn.

Read AOI Budget and Tax Issues Update here.