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Split testimony at SB 1507 hearing: advocates back EITC expansion while business groups warn against disconnecting federal expensing rules
Summary
At a public hearing on SB 1507, supporters urged disconnecting certain federal tax provisions and expanding the Earned Income Tax Credit to protect services; business groups and CPAs warned that disconnecting bonus depreciation and other federal rules would raise compliance costs, reduce investment and act as a short‑term revenue advance.
The Senate Committee on Finance and Revenue opened a public hearing on Senate Bill 1507, a comprehensive tax package that would close specified tax preferences, expand the state Earned Income Tax Credit (EITC) and—depending on the amendment—disconnect Oregon from select federal tax provisions. Committee staff described three amendment paths: dash 3 (standard reconnect language), dash 4 (disconnect selected provisions) and dash 5 (builds on dash 4 and adds a new jobs tax credit with a placeholder cap).
Supporters: Daniel Hauser of the Oregon Center for Public Policy, labor unions, anti‑hunger advocates and many community witnesses urged the committee to adopt the dash 5 approach. Hauser argued HR 1’s federal tax changes disproportionately benefit the top 1% and that SB 1507 would preserve social services and improve affordability. Labor and human‑services witnesses warned that federal cuts to SNAP and Medicaid will increase state pressure and cited the EITC expansion as direct relief for low‑income families. "The EITC helps nearly a quarter million Oregonians each year," Hauser said; other witnesses described how increased refunds would pay for childcare, rent and groceries.
Opponents: Business groups, CPAs and small‑business representatives urged the committee to reject the dash 4/dash 5 disconnects and to prefer the dash 3 reconnect option. Witnesses from Oregon Business & Industry, the Oregon Society of CPAs, the Farm Bureau, NFIB and chambers argued the most harmful change would be disconnecting bonus depreciation (full expensing). They said bonus depreciation is primarily a timing convention that encourages capital investment and helps cash flow for capital‑intensive sectors (manufacturing, agriculture). "Disconnecting from bonus depreciation would put Oregon businesses at a competitive disadvantage," said Derek Sangston of Oregon Business & Industry. Small manufacturers and accountants warned disconnecting creates two sets of books, increasing compliance costs for firms with small accounting staffs.
Key contested provisions and numbers: Committee staff noted the dash 5 jobs tax credit includes a placeholder cap of $12,500,000 per year; OEA indicated the budgetary impact of reconnects depends heavily on how 2025 tax filings settle. Testimony cited various estimates of harm from HR 1—for example, the Oregon Food Bank testimony noted projections that could put more than 2.34 million Oregonians at risk of benefit losses totaling roughly $475 million per biennium—figures witnesses attributed to their written analyses.
Process and next steps: The committee accepted two‑minute oral testimony and invited additional written comments. No vote was taken; the chair closed the public hearing, noting the committee will continue deliberating the bill and its amendments. Several witnesses urged that if disconnects are adopted, the Legislature should consider strategic use of reserves and further evaluation of tax expenditures to blunt impacts on vulnerable populations.
What to watch: Whether the committee adopts dash 3 (reconnect) versus dash 4/dash 5 (disconnect plus jobs credit) and the final design and cap of the proposed jobs tax credit. OEA's earlier forecast and the outcome of the April tax‑filing season could materially change budget room for SB 1507 provisions.
