The purpose of the Special Session is to pass LC 1 (linked here), which allows sole proprietors (with at least 1,200 employee hours) to take advantage of Oregon's lower tax rates for "pass through" businesses. LC 1 is Governor Brown's bill.
On its face, OSCC certainly does not disagree with the spirit of the legislation. In fact, we would likely support any expansion of Oregon's "small business tax cut."
But we have strong concerns about getting involved in this particular legislative effort for the following reasons:
- This bill is a "face saving" gambit that stems from of the passage of SB 1528 earlier this year which denied $200 million per year in state tax cuts to all Oregon pass-through businesses.
- LC 1 only represents a tax reduction of $11 million per year for small business, a far cry from the $200 million tax increase that LC 1 is attempting to mitigate.
- We question the fairness and wisdom in extending tax cuts to sole proprietors with employees and not to single member LLC's with employees. The result is inequitable. If the business is incorporated, it does not get the tax cut. If the business is not incorporated, it does receive the tax cut.
The Joint Committee on Sole Proprietors has been appointed and will begin to receive public testimony on Wednesday at 1pm. OSCC will be present at the public hearing.
As of now, we have no idea how this Special Session is going to play out. Negotiations are fluid. It has not been pre-negotiated. Nobody (other than the Governor) believes this is an emergency worthy of a special session. Neither the Democrats nor the Republicans are particularly pleased to be in this situation.
We will keep you updated as we know more. If it appears that OSCC needs to engage, the Government Affairs Committee will convene.
