Strategic Pillar I: Sound Budgeting & Resource Management
Moving the Dial: Tax policies and state investments to address building the middle class, jobs creation & business development
Oregon continues to struggle with a slow economic recovery, especially in rural areas, and disappearing middle income jobs. In June, state labor data revealed that while the state’s economy is improving, wages are stagnant and the labor force participation rate (adults who are working or looking for work) dropped to 61.1 percent, the lowest in nearly 40 years.
“Oregon private sector workers earned $22.79, on average, in June, just 42 cents more than a year ago. The rise is roughly in line with inflation, leaving workers’ earnings power flat.”
An extension and an adjustment are warranted for two tax policies that help middle and low-income Oregonians and bring money into local economies: Child care tax credits and the Earned Income Tax Credits.
In addition, the state’s Research & Development (R&D) tax credit should be expanded to meet needs of Oregon’s traded sector industries that are a critical part of Oregon’s economic engine.
- Child care tax credits: The Child and Dependent Care, Working Family Child Care and Employer Provided Dependent Care tax credits are set to expire at the end of 2015. OBA supports extending the child care tax credits another six years, at a minimum.
- Earned Income Tax Credit (EITC): Oregon should increase the state EITC to 10% of federal from the current 8% to aid working families and keep them from falling out of the lower middle class.
- R&D tax credit: OBA supports an expansion of the R&D tax credit limit from $1 million to $2 million per taxpayer. This would expand Oregon’s competitiveness for advanced manufacturing, clean and high technology.
- Employment Related Day Care (ERDC): OBA believes that Oregon should restore ERDC to serve all eligible families who request the subsidy, as it did before cuts in 2009. In addition, Oregon should expand eligibility to 250% of the Federal Poverty Level, which more accurately reflects a family’s ability to afford child care costs.
In addition, Oregon should allow ERDC-eligible clients to use their child care voucher to cover hours used for participation in coursework that leads to a certificate, degree, or skills attainment at an Oregon-based institution of higher education.
- Brownfields: OBA supports recapitalizing the Brownfields Redevelopment Fund, administered by Business Oregon, to $50 million, funded by Lottery bonds.
- Minimum Wage: OBA’s Business & Finance committee evaluated Oregon’s minimum wage (currently the second highest in the nation after Washington State). We believe a modest increase will be part of the overall discussion in Salem as part of a broad-based effort in support of policies such as the Earned Income Tax Credit described above, designed to boost incomes for lower-middle income families across the state.
Middle Income Stagnation
1988: Median U.S. household income – Just under $52,000
2013: Median U.S. household income – Just under $52,000
–U.S. Census Bureau