Oregon voters could have a taxing year

PORTLAND – Oregon voters are staring at a busy 2004.

Labor unions have drawn up an array of tax and revenue initiatives they may take to the streets if voters ultimately overturn the Legislature’s $800 million budget-balancing package of temporary and permanent increases.

At the same time, antitax groups have filed initiatives to cut taxes on capital gains and further limit property taxes.

And, later this month, a group of lawmakers is expected to begin work on a possible overhaul of the state tax code, which also could wind up before voters.

For Oregonians, the various approaches promise a broad set of options for how and how much they pay for state government services.

Tim Nesbitt, president of Oregon AFL-CIO, said unions have devoted much of the past two years to studying the state’s tax system and examining possible changes.

They’ve taken the proposals that might do best with voters, fashioned them into initiatives and filed them with the state Elections Division.

Among the initiatives are proposals that would:

– Require corporations to pay the same income tax rate as individuals. Currently, business income is taxed at 6 percent, while wage earners pay 9 percent on most of their income.

– Establish a statewide property tax.

– Establish a tax on business transactions.

– Add a 2 percent surcharge to income taxes paid by wealthier Oregonians.

– Make broad reductions in tax breaks taken by business and individual income taxpayers.

Whether the unions go forward with collecting signatures for ballot measures depends largely on what happens with the current referendum – an effort by tax opponents to overturn the Legislature’s recent tax increase.

The decision also will be influenced by the legislative tax reform committee’s actions, Nesbitt said.

The 20-member committee has until June 1 to come up with tax overhaul recommendations that could range from a sales tax to a state “rainy day” fund.

The Legislature then has five days to convene in special session and decide whether to institute the proposals.

Rep. Lane Shetterly, R-Dallas, who is heading the tax reform effort for the Oregon House, said he worries that the union initiatives could become “counterproductive.”

“My hope is they’ll come to the table and put their initiatives on hold, or at least not bring them out while we’re working,” Shetterly said.

The most immediate threat, from the unions’ point of view, is the effort to force a statewide vote on the Legislature’s tax package.

To balance the 2003-05 budget, lawmakers in August approved a temporary, three-year surcharge on personal income taxes along with other permanent tax increases for businesses, retired residents and others.

Opponents of the tax package have been gathering signatures to put it on a Feb. 3 ballot. To do so, they must turn in 50,420 valid petition signatures by Nov. 25.

“We have no doubts we’re going to make it,” said Russ Walker, Northwest director of Citizens for a Sound Economy, which is overseeing the effort.

Walker said the unions underestimate the intensity of the public’s antitax feelings.

“It would be a mistake to think that if we defeat this tax increase, the unions can come back and raise taxes in bits and pieces,” Walker said.

(Copyright 2003 by The Associated Press. All Rights Reserved.)