An upcoming auction for tax credits could save winners anywhere from $50 to $1.12 million on state taxes, all while funding Oregon’s largest needs-based scholarship program.
The online auction is in its fourth year, and offers bidders the opportunity to shave their tax bill and direct a portion of what they would pay in taxes to college scholarships.
From Monday, Dec. 6, to Friday, Dec. 10, the state Revenue Department will auction off 28,000 tax credits, worth $500 each. That’s a total of $14 million. And they sell out each year.
The money paid by bidders will go to fund the Oregon Opportunity Grant program, which helps with college expenses for about 40,000 low-income students in the state each year.
Starting bids must be at least 90% of the face value of each tax credit, making the minimum bid $450.
In turn, the winners get to use the full amount of that tax credit against the overall state taxes they owe at the end of the year. The average bid per credit in previous auctions was $460 according to Jackie Hovey, an income tax analyst at the Revenue Department.
“It’s a way for people to direct their tax dollars to go to a fund that they want to support,” Hovey said. And, using a $460 bid on one of the $500 tax credits as an example, “you would get a $40 discount on your $500 in taxes owed.”
If a taxpayer bought all 28,000 credits at $460 each – possible but hasn’t happened yet – they would save $1.12 million off a $14 million tax bill.
Both companies and individuals participate in the auction each year, but Hovey said most bidders are individuals, and some do buy thousands of dollars worth of these tax credits.
Kyle Thomas is director of legislative and policy affairs at the Higher Education Coordinating Commission. The agency oversees the Oregon Opportunity Grant program and markets the auction.
Thomas said each year several individuals have winning bids for over $100,000 worth of certificates.
“I assume they are people at the higher end of the income bracket,” he said.
“What we’re learning, as we do this over time, is that bidders are focused on their tax liability and where their money is going,” he said.
The Oregon Opportunity Grant has a two-year budget of about $200 million. Thomas said the auction brings in about $12 to $13 million for the scholarship program each year.
“If there was a situation when these funds were no longer available it would dramatically affect the program,” he said. “It would require us to go back to the legislature to make up the funds.”
Date: 2021-12-05 08:37No tags for this post.