U.S. House Approves Tax Bill Which Could End Oregon’s Deduction For State and Local Taxes

The House tax bill that passed today could hurt Oregonians who deduct state and local taxes.

U.S. Rep. Greg Walden (left) and House Majority Leader John Boehner in 2010. (Office of House Majority Leader)

The U.S. House of Representatives today passed a controversial tax reduction bill on a narrow, mostly party-line vote.

President Donald J. Trump has repeatedly said he wants a large tax-cut package signed by Christmas. The House and Senate are pushing competing versions but both seek to slash corporate taxes.

The final tally in the House today was 227 to 205, with 13 Republicans voting against the bill and no Democrats voting for it.

"The House tax bill, which passed in the Ways and Means Committee last week, would cut taxes more than $1.4 trillion over 10 years," the New York Times reports.

"It cuts the corporate tax rate to 20 percent from 35 percent, collapses the number of tax brackets to four from seven, switches the United States to an international tax system that is more in line with the rest of the world, and eliminates or scales back many popular deductions, including one for state and local taxes paid."

On Monday, the Oregon House Revenue Committee met to discuss the potential consequences of the federal House bill.

The non-partisan Legislative Revenue Office took a look at the impact of Congress' interest in eliminating the deductibility of state and local taxes.

In 2015, Oregonians paid $8.05 billion of such taxes, according to the Legislative Revenue Office's analysis of 2015 IRS figures.

Because of Oregon's heavy dependence on state and local taxes (abbreviated as SALT below) , the percentage of Oregonians who would be hit if the House plan succeeds—29 percent—is far more than most states.

Ending the deductibility of state and local taxes would make the average Oregonian who itemizes deductions poorer, costing more than 600,000 taxpayers an average of $573 each.

The loss of state and local tax deductions will hit Oregonians far harder than Americans as a whole: such deductions are 7 percent of adjusted gross income (AGI) here, versus just 5.3 percent for the rest of  the country.

The state's only Republican congressman, U.S. Rep. Greg Walden (R-Ore.) voted for the House bill today.

U.S. Rep. Earl Blumenauer (D-Ore.), who joined other Oregon Democrats in opposing the bill, blasted it as a giveaway to the rich—including the president.

"Today's vote by House Republicans passing their tax bill is an early Christmas gift to Donald Trump. It's perfectly designed for his benefit," Blumenauer said in a statement. "It eliminates the alternative minimum tax, one of the few ways Trump pays any tax at all. It abolishes the inheritance tax, allowing him to pass on, tax free, hundreds of millions of dollars to his family."

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