|This report describes 293 individual tax expenditures currently specified in Oregon law. Of those, 101 are related to local property taxes and 152 to Oregon´s personal and corporation income taxes. The remaining 40 are related to various other state tax programs.
Eighty-seven of the 152 income tax expenditures result from Oregon´s connection to the federal income tax code. By adopting the federal definition of taxable income, Oregon also adopts all of the exclusions and deductions from income that are part of the federal personal and corporation income taxes. Since 1997, Oregon automatically connects to the federal definition of taxable income. This connection greatly reduces the costs for taxpayers to comply with Oregon tax law and simplifying tax administration. Oregon could "disconnect" from individual provisions in the federal tax code, but doing so would also increase compliance and administration costs and could create confusion.
For the 1997–99 biennium total tax expenditures will result in the "spending" of about $19.9 billion through Oregon´s tax code. Over the same period the State of Oregon and local taxing districts will collect roughly $16.0 billion in taxes for spending on various state and local programs. This indicates that governments in Oregon "spend" more through special provisions in the tax code than they do through direct outlays.
The table below shows estimates of tax expenditures by tax program for the 1997–99 and 1999–01 biennia. The table also shows estimates of the total revenues raised in 1997–99 by each tax. The largest tax expenditures occur in the property tax, where aggregate tax expenditures of over $14 billion per biennium are more than twice the amount of revenue actually raised. The largest property tax expenditures are the exemption of intangible personal property ($7.7 billion), the exemption of federal property ($2.8 billion), and the exemption for privately-owned standing timber in western Oregon ($1.0 billion).
For income taxes (personal and corporation), tax expenditures in 1997–99 total over $5 billion, roughly 67 percent of actual tax collections. The largest expenditures are for Oregon´s personal exemption credit ($717 million), the deduction of home mortgage interest ($525 million), and the deduction for pension contributions and earnings ($523 million).
The remainder of this report provides more detailed descriptions and revenue impact estimates for each tax expenditure currently specified in Oregon law.
OREGON REVENUES AND TAX EXPENDITURES
BY TAX PROGRAM
(Millions of Dollars)
Number of Estimated Estimated
Tax Expen- Revenues ___Tax Expenditures___
Tax Program ditures 1997-99 1997-99 1999-01
Income (Total 152 $7,769.5 $5,178.8 $5,430.8
Federal Exclusions 53 $2,166.1 $2,410.3
Federal Deductions 34 $1,103.7 $1,211.9
Oregon Subtractions 20 $1,032.2 $888.6
Oregon Credits 45 $876.8 $920.0
Property 101 $5,076.8 $14,666.4 $15,933.2
Gas and Use Fuel 4 $773.0 $5.1 $5.2
Weight-Mile 7 $428.0 $10.5 $10.5
Cigarette & Other Tobacco 6 $413.3 $0.5 $0.5
Insurance 7 $113.6 $31.4 $17.5
Beer and Wine 1 $25.3 $1.5 $1.5
Other State Taxes 15 $1,444.2 $4.6 $4.7
All Taxes 293 $16,043.7 $19,898.7 $21,403.8