SB 1528B Creates Tax Credit for Contributions to Opportunity Grant Fund

VOTE: NO – Governor Brown Signed  
Status (overview) of bill:

This bill requires federal pass-thru tax credits for business owners be added back on Oregon returns. Allows a credit against personal or corporate income/excise taxes that make certified Opportunity Grant contributions through an auction of tax credits to provide need-based financial aid to resident students.

Personal Choice and Responsibility
Provides opportunities for students needing assistance.

Fiscal Responsibility
Limits fiscal year certifications of tax credits to no more than $14 million total. Reimburses commission for actual costs of auction not to exceed 0.25% of auction proceeds. Allows the unused portion of tax credit to be carried forward to succeeding tax years. Applies to tax years beginning on or after January 1, 2018 and before January 1, 2024.

Limited Government
Allows the Higher Education Coordinating Commission, in collaboration with the Department of Revenue, to operate a tax credit auction similar to that which funds the work of the Oregon Film and Video Office, to generate $14m annually for the Oregon Opportunity Grant, the state’s need-based financial aid program for resident Oregon students.

Free Markets
Oregon will not allow the credit under IRS § 199A that offers a new 20% deduction for “pass-through” businesses – i.e. businesses that are not corporations. With the corporate tax rate being reduced under the new law to a flat 21%, the 20% deduction for other forms of businesses was designed to give a reduction to these businesses approximating the lower corporate tax rate. If applicable, the 20% deduction can be claimed by the owners of S corporations, partnerships, sole proprietorships, and even the beneficiaries of trusts. These are business entities that do not pay income tax at the business entity level (such as corporations), but where the profits and other income of the business go to or “pass-through” to the owners. However, this 20% deduction is saddled with exclusions, phase-outs, technical issues, and uncertainties so that many well-meaning non-corporate business owners may not receive the benefit. The Opportunity Grant involves businesses in creating a qualified workforce to fill their needs.

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