If your email inbox is anything like ours, it’s been under constant assault in recent days by politicians and political parties urging you to use your Oregon political tax credit by the end of the year. The credit is certainly a useful tool for people in the get-elected business, so their pestering is understandable. But the sudden flurry of use-it-or-lose-it reminders is a bit jarring, coming as it does just weeks before legislators will confront a budget deficit for the coming biennium estimated to exceed $620 million.
Oregon is struggling to pay its bills, yet millions of dollars in tax revenue will continue to be diverted to political campaigns. And many legislators want to raise taxes even further?
Oregonians are allowed to claim a credit against their personal income taxes for qualified political contributions. The credit is capped at $50 for individual filers and $100 for taxpayers filing jointly. The credit is not available to individual filers with gross income above $100,000 or to joint filers with gross income above $200,000.
The credit’s purpose is to encourage relatively small donations, and that’s laudable. However, the income group that uses the credit most frequently doesn’t exactly need the help. According to the state’s most recent tax expenditure report, filers with gross income above $92,700 used the credit more frequently than any other group in 2016. Meanwhile, that income group’s credits accounted for nearly half of the program’s impact on the state budget.
The tax credit will cost the state $11.3 million during the 2017-19 biennium and $5.6 million during the 2019-21 biennium. The latter number comes with an asterisk, though. It assumes that the credit will sunset on schedule at the end of 2019, as it should. If it doesn’t, you can expect the biennial impact to exceed this biennium’s $11.3 million.
Surely there are better uses for all of this tax revenue than political campaigns, starting with public school funding. Unfortunately, the people who will decide whether to renew the credit are those who benefit from it: state legislators. A draft bill to extend the credit to 2026 has been drawn up already for consideration during the coming session.
No one should be surprised if lawmakers extend their pet tax credit next year regardless of size of the budget deficit or the credit’s impact on public services. Oregonians should keep the credit’s fate in mind, though, should they have a chance to vote on tax increases imposed by those very same legislators.