An initiative that would slice about $400 million a year from the state’s budget by cutting Oregonians’ income taxes has qualified for the November ballot, elections officials said Friday.
The measure, which is backed by the Oregon chapter of FreedomWorks, an anti-tax group, would reduce state income taxes for most middle-income Oregonians by about $130 per exemption claimed for an individual, a spouse and dependents.
The initiative qualified by the skin of its teeth, turning in 79,196 valid signatures, about 4,000 more than the amount needed to qualify a measure that would change state law for the ballot.
Current policy allows Oregonians to claim a $154 tax credit on their state tax returns. The measure would allow residents to switch to the more generous personal exemption amount offered by the federal government.
Backers of the measure freely admit that it would result in deep cuts to the amount of money legislators have to spend each session on schools, public safety and human services — currently $11.6 billion in general fund dollars.
Russ Walker, the executive director of FreedomWorks, said legislators would have to cut back on programs outside of what he deemed “core services.”
“We believe state government already has more than enough money to accomplish the tasks that citizens have asked them to focus on,” he said. “This puts money back into the pockets of people so that they can spend their money where they deem it necessary.”
Asked for an example of a government program that could be cut back if the tax measure passes, Walker said the state could privatize entire agencies, like the Department of Transportation, find savings in the public employees retirement system, and cut back on funding for smaller programs.
But opponents of the measure said the state had already made significant program cuts during the 2001-2003 recession, and that the new measure would put Oregon in danger of losing federal matching dollars that go to human services programs.
“It is irresponsible,” said Chuck Sheketoff, executive director of the Silverton-based Oregon Center for Public Policy, which does research and advocacy on issues affecting the working poor. “There’s no direction on where the state would have to make the cuts. Taking almost a billion dollars out of the state’s budget would be felt by many Oregonians.”
If enacted, the primary beneficiaries of the measure would be people or families who make between $27,000 and $72,000 who can claim several dependents. The federal system allows taxpayers to subtract $3,200 from their taxable income for each dependent — usually the taxpayer, their spouse, and any children. Oregon’s system, by contrast, is a tax credit, under which taxes bills are calculated prior to credits, which are then subtracted out.
Those who make more than $200,000 per year are currently ineligible for the federal exemption, and so would not be affected by the change, Warner said. Similarly, low-income Oregonians who claim no dependents would not receive any benefit, he said.
So far, the measure’s largest donor, at $100,000, has been Loren Parks, the reclusive Nevada medical equipment manufacturer who’s funded many of Oregon’s anti-tax initiatives in the past, as well as right-leaning candidates.
In 2000, Oregonians turned down a measure backed by anti-tax activist Bill Sizemore that would have made all federal income taxes deductible on state income tax forms, cutting one-fifth of the state’s general fund, and saving taxpayers $1 billion per year.