Three strikes never looked so good

The image, from an Oregon Legislature committee hearing, represents what I’m thinking most times I testify about some poorly designed bill that would give away taxpayers money. Generally I try to look more dignified.

Actually, last week I testified in favor of THREE bills that would save taxpayers’ money, and the image is from one of them, explained below. Three strikes! It may never happen again.

My cadre of dedicated volunteers in Tax Fairness Oregon picks two or four ideas each session we want turned into law. We have no bandwidth for more, because we spend so much of our energy testifying against stupidity—bills that raid the state treasury for dubious purposes, or perhaps for good purposes but via bad mechanisms. I’ve spoken against a dozen this session.

For example, the House and Senate tax committees, where we focus our attention, have held three hearings on bills that would raise the exemption for the estate tax. Currently $1 million, that’s a million tax-free for people who won the birth lottery and stand to inherit assets from their parents (or others who took a shine to them), paid for by the rest of us, most of whom will never know anything like a million dollars no matter how many Powerball tickets we buy. It’s a perennial issue. Generally we get one courtesy hearing in each Democratic-controlled committee, but this year a new Senate chair has scheduled a fourth hearing. Like the others, the bill up this week would foist the cost onto the general treasury.

Last week I testified against two other bills that would give away our money; both would exempt from tax part or all the pensions of military retirees. Advocates said enactment would encourage said retirees, most of whom might be 40 years old and have admirable job skills, to move to Oregon. I did the math (we always do the math) and opined that $1500 or $3000 a year in tax savings would hardly inspire anyone to pull up stakes. Legislators have the prerogative to do what they want, I said, but they ought to be clear why they’re doing it. If it’s to be nice to vets, then what about retired cops, or teachers? Their pensions are taxed. Same rookie Senate chair responded: “If we had a room full of veterans here, they would be very offended by what you said.” No doubt, I thought but didn’t say. Most of the time I speak, the rest of the room is begging you to open our wallets.

But I digress. This post is about good news.

Opportunity Zones

Two of the three bills I advocated are more or less my creation. On one, I was the lead guy, back in 2020, in a coalition that convinced the chair of the House tax committee to champion our idea: impose state income tax on profits from Opportunity Zone investments, the 2017 provision Congress designed to benefit millionaire investors by giving them several kinds of tax breaks for mostly real estate projects in low-income areas. The 2020 bill died. First, pseudo-Democrats who think trickle-down economics works demanded the bill be diluted. Then, on the day it was scheduled for a floor vote, minority Republicans walked out, denying the two-thirds quorum to conduct business, and they never returned. The session ended weeks early.

After the Covid pause in 2021 and 2022, I got another legislator to introduce the same bill, and I’ve been lobbying legislators for three months, largely by myself. Our coalition partners are for it, as they were three years ago, but they have higher priorities this session.

Anyway, the committee chair—our sponsor in 2020—held a hearing last week. It drew little attention. Only the state’s top business lobbyist and I testified. The lobbyist offered belief, as in: “We believe that the bill would disincentivize Opportunity Zone investments in Oregon.” In my 11-minute presentation (starting at 8:30 of this video stream), I offered evidence: the statement of an Oregon developer who is building an office/retail/restaurant/residential complex in a poor Portland suburb; he said O Zone enticements don’t work in target neighborhoods because their returns are too low compared to high-profile projects like the five-star Ritz-Carlton hotel/retail/condo that will open downtown in a few months. Because most O Zone investments are out of state, and because Oregon can’t tax non-residents who invest in Oregon O Zones, the bill would have a vanishingly small effect on Oregon investors’ calculations or on O Zone projects in state.

My opposition among Democrats runs like that of a veteran legislator who told me: “Don’t tell me this is a bad tire, tell me about a good one.” I  don’t think it’s my job to educate you about other economic incentives that give you something to support. I’m simply telling you this one doesn’t work. And I keep making the rounds.

Opportunity Grants

The other bill was the subject of the hearing from the image. (I noted it in my last post.) The bill would increase funding for grants to low-income college students for exactly the same cost to the state. Magic!

For five years, the state has financed a sliver of $200 million in Opportunity Grants funding through auctions of tax credits. The people who buy the tax credits at a discount take some of the money that would go to students. It’s the dumbest tax provision I’ve encountered in five years of reading the Oregon tax code. My proposal is to switch the funding from tax credit auctions to the regular appropriations process, which would provide grants to an additional 300 students a year. Not a big deal. Unless you’re one of those students.

That bill has a smoother path. Last month, I got one committee to amend it how I wanted it, ending the auctions earlier than under current law, and then pass it, unanimously. The second committee held a hearing on it Friday; after a vote it would head to both floors and then the governor’s desk, knock on wood. I’ll keep working it, too.

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