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Lawmakers try again to introduce bill that would repay Oregonians for tax on stimulus


(KATU)
(KATU)
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Earlier this year, state legislators introduced multiple bills that would repay nearly 900,000 Oregonians who paid more in state taxes after receiving stimulus payments from the federal government. Those bills never made it out of committee. Now, with less than a week left in the session, a group of Republican lawmakers is trying again.

On Monday, a dozen House Republicans introduced HB 3411 which would create a refundable tax credit to pay Oregonians back for the increased taxes on their returns next year. The bill is on the House Speaker's desk, waiting to be referred to a committee.

The stimulus checks weren't directly taxed, but the increased state tax liability is an unfortunate consequence of Oregon's tax code, which is tied to the federal tax code. It's known as the income tax subtraction. In this case, Oregonians paid less in federal taxes, meaning they had to pay more in state taxes. Just five other states have a similar rule.

Nearly 900,000 people were impacted with an average increase in their tax liability of more than $300. State economists said it would cost $300 million to repay Oregonians.

"There is really no excuse at this point why we shouldn’t be giving Oregonians their money back," said Rep. E. Werner Reschke, R-Klamath Falls, in an interview with KATU News.

Reschke is a chief sponsor of the latest bill. He said the money should be returned to Oregonians.

"The quirk in Oregon’s tax system is that although the federal stimulus checks came to you, Oregon’s tax system then taxes that money," said Reschke. "Up to $300 million is sitting in the Legislature that they are going to spend on other projects instead of giving it back to you. So I’d call the Legislature and let them know you want your money back."

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In February, U.S. Rep. Peter DeFazio, D-Oregon, wrote aletterto Gov. Kate Brown and the state Legislature urging them to repay taxpayers.

"This indirect tax will disproportionately impact individuals earning between $20,000 and $70,000 and families earning between $50,000 and $100,000 annually. It is unconscionable to ask those working families who have struggled the most during this crisis to bear the weight of the state’s budget shortfall," wrote DeFazio. "These Oregonians should not have their [Economic Impact Payments] diluted."

DeFazio went on to say Congress is giving the state enough money to cover a shortfall.

Political expert Jim Moore said, even with just a week left in the session, it's possible to move a bill like this through the Legislature. He said it would take support from House and Senate leadership.

"The odds of that happening are better than they would usually be, simply because Oregon has more money than it thought it would have," said Moore.

KATU News asked the offices of House Speaker Tina Kotek and Senate President Peter Courtney if they would support an effort like this, but did not hear back by deadline.

A spokesperson for Brown, Liz Merah, said in an email to KATU that the governor's goal is to ensure the state targets state financial aid to families who were hit hardest by the pandemic. Should a bill be introduced, Merah said they would review it.

Earlier this year, there was some conversation about having taxpayers file an amended return. This bill creates a fix for people on their tax returns next year. A Department of Revenue spokesperson told KATU News that allows the agency to incorporate the additional work into its normal update processes and allows e-file software providers time to adjust their software.

This story is part of our Following the Money initiative. If you suspect government waste or a lack of accountability, give our Following the Money reporter, Keaton Thomas, a call or write him an email.


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