And here's another economist who doesn't like tax breaks as stimulus

That's Chuck Sheketoff of the Oregon Center for Public Policy.  He says that one such tax break in the federal stimulus bill, bonus depreciation, will cost Oregon money at the worst possible time:

"[Bonus depreciation] is a business tax break recognized as an ineffectual economic stimulus. Because Oregon automatically follows the federal definition of taxable income, ...the extension of bonus depreciation by the federal government will further shrink Oregon’s tax revenues. OCPP estimates that the measure could cost Oregon roughly $67 million over two years... ."

How?  Without getting all bogged down in economic intricacies, suffice it to say that, like any tax break, bonus depreciation decreases the taxable income of Oregon businesses, thus reducing tax revenue to the state.  Sheketoff argues that now is not the time to further hamper the state's ability to spend money on vital state services. 

Sheketoff cites Moody's Economy.com chief economist Mark Zandi's estimate that bonus depreciations yield only 25 cents on the dollar, while "each dollar spent mitigating state budget shortfalls could yield $1.38 in increased economic growth."

What can Oregon do?  Simple.  Decouple the state's definition of taxable income from the federal tax code.

Will state legislators do that?  You'd think that with sizable Democratic margins in both the state House and the Senate, it would be a slam dunk.  But then again, it's Oregon Democrats we're talking about here. 

Comments

[anne t.]

Using this site to make this announcement.
Mike Leachman of the Oregon Center for Public Policy is leading a workshop at Saturday's Economic Crisis Town Hall.
Town Hall on the Economic Crisis
Saturday, January 31
First Unitarian Church, 1011 SW 12th Ave. at Main
12:30 - Doors Open
1:00 – 2:30 - Understanding the crisis - Marty Hart-Landsberg
Making a new vision a reality - Veronica Dujon
2:45 – 4:00 - Breakout sessions (described below)
4:15 – 5:00 - Working together – Building a movement
Barbara Dudley
Tom Leedham
David Bacon
JoAnn Bowman
5:00 – 6:00 - Food and Reception

[Lindsey20Flynn]

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