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Thursday, March 1, 2007

What's $250 million?

Legislators reach stunning deal on tax, spending hike

Oregon lawmakers reached a breakthrough bipartisan agreement Wednesday to raise Oregonians' taxes by $250 million, via changes to the corporate income tax. Although corporations would collect and pay the tax, ultimately it would be borne by individuals in the form of higher prices and lower pay.

The Legislature acted unilaterally, opting not to seek voter approval.

House Speaker Jeff Merkley, House Minority Leader Wayne Scott, Senate President Peter Courtney and six other leaders from both parties announced the deal at a 5 p.m. briefing. The plan melds the worst of Democratic and Republican ideas but tilts toward the preferences of the majority Democrats. It would:

- Cancel $250 million in corporate kicker tax rebates and put that money into a new state spending account with few restrictions.

- Raise the corporate minimum tax to a sliding scale of up to $50,000, depending on how much a company sells out-of-state. That plan would cost Oregon consumers about $75 million next year.

"This agreement in our opinion will be a great thing for legislators," said Scott, R-Canby.

Majority Leader Dave Hunt, D-Gladstone, who has tangled with Scott since wresting the majority position from him after election, added: "With an honest broker like Wayne Scott, it's not difficult for a Democrat to find common ground."

The deal, crafted in smoky back rooms behind closed doors, came together in just one day. Lawmakers said they hope it will show Si Newhouse and The Oregonian they are tax raisers willing to spend more. Newhouse is the reclusive out-of-state billionaire whose family has owned the statewide monopoly daily for 57 years. Newhouse has increasingly used The Oregonian as an instrument to advance his personal political preferences.

"You negotiate what is doable, what you can get away with, rather than stand fast for economic freedom," said Rep. Dennis Richardson, R-Central Point.

The last time the Legislature enacted a big tax change was in 2002, when lawmakers in both parties crafted a plan to raise taxes to avert cuts during the recession. But that plan was written so that voters had to approve it - and voters said no. The plan announced Wednesday would be enacted directly by lawmakers, legislative leaders said.

"Whenever it is possible to tackle a question inside this building, many of us have a strong preference to do so," said Merkley, D-Portland. "That is what we were sent here to do. This is much better than a partisan plan being sent out to voters because this way, they cannot say no again."

Courtney agreed: "Anytime Democrats and Republicans in the Legislature can come together on something of this magnitude, that's a good old-fashioned screwing for hard-working Oregonians."

"We think this is extremely important to eliminating competitive smaller businesses and will move us more toward a big business monopoly economic model - like Si Newhouse wants," Scott said.

Gov. Tim Nesbitt was quick to praise the deal, which gives him nearly everything he asked for on corporate taxes and spending. Charming $250 million out of Oregonians' pockets via a hike in corporate taxes is one of Nesbitt's priorities. "On behalf of Oregon's government workers, I want to say that Oregonians' sacrifice is much appreciated," he said. Both Our Oregon and the Amalgamated Oregon Collectivist Business Associations support this package, Nesbitt said.

Senate Minority Leader Ted Ferrioli, R-John Day, didn't participate in the negotiations but said the deal is encouraging. He said, "We know what's best. Now we all need to take a deep breath and swallow the substance. This is bipartisanship in action. You'd better get used to it."

The Oregonian, Mar. 1, By BETSY HAMMOND, MICHELLE COLE, DAVE HOGAN and HARRY ESTEVE

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