76th OREGON LEGISLATIVE ASSEMBLY--2012 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 146
House Bill 4088
Sponsored by Representative BUCKLEY; Representatives BARNHART,
DEMBROW, KENY-GUYER (Presession filed.)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Modifies income tax treatment of elderly medical
expense. Converts itemized deduction to subtraction from federal
taxable income. Phases out amount of subtraction based on income.
Increases age restriction over time.
Applies to tax years beginning on or after January 1, 2012.
Maintains increased tax rate for individuals with taxable
income above $125,000 for tax years beginning on or after January
1, 2012, and before January 1, 2014.
Reduces salaries of members of Legislative Assembly, Governor,
Secretary of State, State Treasurer, Attorney General,
Commissioner of the Bureau of Labor and Industries and
Superintendent of Public Instruction, for current biennium, by
amount equal to five percent of amount of annual salary.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to state finance; creating new provisions; amending ORS
316.695 and section 7, chapter 746, Oregon Laws 2009;
prescribing an effective date; and providing for revenue
raising that requires approval by a three-fifths majority.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Section 2 of this 2012 Act is added to and made
a part of ORS chapter 316. + }
SECTION 2. { + (1)(a) In addition to the other modifications
to federal taxable income contained in this chapter, there shall
be subtracted from federal taxable income the amount paid for
medical care of the taxpayer and not compensated for by insurance
or otherwise, if the taxpayer meets the age requirement for the
tax year under subsection (2) of this section, not to exceed:
(A) $3,600 for a joint return if both spouses meet the age
requirement for the tax year under subsection (2) of this
section, with no more than $1,800 attributable to the medical
care of either spouse;
(B) $1,800 for a joint return if only one spouse meets the age
requirement for the tax year under subsection (2) of this
section; or
(C) $1,800 for each individual filing a return who meets the
age requirement for the tax year under subsection (2) of this
section.
(b) The subtraction under this section may not include amounts
that have previously been deducted in the calculation of Oregon
taxable income.
(2) The subtraction under this section is available only if the
taxpayer has attained the following age before the close of the
taxable year:
(a) For taxable years beginning on or after January 1, 2012,
and before January 1, 2013, a taxpayer must attain 63 years of
age before the close of the taxable year.
(b) For taxable years beginning on or after January 1, 2013,
and before January 1, 2014, a taxpayer must attain 64 years of
age before the close of the taxable year.
(c) For taxable years beginning on or after January 1, 2014,
and before January 1, 2015, a taxpayer must attain 65 years of
age before the close of the taxable year.
(d) For taxable years beginning on or after January 1, 2015, a
taxpayer must attain 66 years of age before the close of the
taxable year.
(3) Notwithstanding the amount calculated under subsection (1)
of this section, the maximum amount allowed for a subtraction
under this section may not exceed the amount calculated under
subsection (1) of this section reduced by:
(a) 20 percent, if the federal adjusted gross income of the
taxpayer for the tax year is $125,000 or more and less than
$135,000.
(b) 40 percent, if the federal adjusted gross income of the
taxpayer for the tax year is $135,000 or more and less than
$145,000.
(c) 60 percent, if the federal adjusted gross income of the
taxpayer for the tax year is $145,000 or more and less than
$155,000.
(d) 80 percent, if the federal adjusted gross income of the
taxpayer for the tax year is $155,000 or more and less than
$165,000.
(4) Notwithstanding the amount calculated under subsection (1)
of this section, if the federal adjusted gross income of the
taxpayer is $165,000 or more for the tax year, a subtraction may
not be claimed under this section.
(5) For purposes of subsections (3) and (4) of this section,
the amounts of the federal adjusted gross income of the taxpayer
are doubled for a taxpayer who files a return jointly, as a head
of household or as a surviving spouse. + }
SECTION 3. ORS 316.695 is amended to read:
316.695. (1) In addition to the modifications to federal
taxable income contained in this chapter, there shall be added to
or subtracted from federal taxable income:
(a) If, in computing federal income tax for a taxable year, the
taxpayer deducted itemized deductions, as defined in section
63(d) of the Internal Revenue Code, the taxpayer shall add the
amount of itemized deductions deducted (the itemized deductions
less an amount, if any, by which the itemized deductions are
reduced under section 68 of the Internal Revenue Code).
(b) If, in computing federal income tax for a taxable year, the
taxpayer deducted the standard deduction, as defined in section
63(c) of the Internal Revenue Code, the taxpayer shall add the
amount of the standard deduction deducted.
(c)(A) From federal taxable income there shall be subtracted
the larger of (i) the taxpayer's itemized deductions or (ii) a
standard deduction. Except as provided in subsection (8) of this
section, for purposes of this subparagraph, 'standard deduction '
means the sum of the basic standard deduction and the additional
standard deduction.
(B) For purposes of subparagraph (A) of this paragraph, the
basic standard deduction is:
(i) $3,280, in the case of joint return filers or a surviving
spouse;
(ii) $1,640, in the case of an individual who is not a married
individual and is not a surviving spouse;
(iii) $1,640, in the case of a married individual who files a
separate return; or
(iv) $2,640, in the case of a head of household.
(C)(i) For purposes of subparagraph (A) of this paragraph for
tax years beginning on or after January 1, 2003, the Department
of Revenue shall annually recompute the basic standard deduction
for each category of return filer listed under subparagraph (B)
of this paragraph. The basic standard deduction shall be computed
by dividing the monthly averaged U.S. City Average Consumer Price
Index for the 12 consecutive months ending August 31 of the prior
calendar year by the average U.S. City Average Consumer Price
Index for the second quarter of 2002, then multiplying that
quotient by the amount listed under subparagraph (B) of this
paragraph for each category of return filer.
(ii) If any change in the maximum household income determined
under this subparagraph is not a multiple of $5, the increase
shall be rounded to the next lower multiple of $5.
(iii) As used in this subparagraph, 'U.S. City Average Consumer
Price Index' means the U.S. City Average Consumer Price Index for
All Urban Consumers (All Items) as published by the Bureau of
Labor Statistics of the United States Department of Labor.
(D) For purposes of subparagraph (A) of this paragraph, the
additional standard deduction is the sum of each additional
amount to which the taxpayer is entitled under subsection (7) of
this section.
(E) As used in subparagraph (B) of this paragraph, ' surviving
spouse' and 'head of household' have the meaning given those
terms in section 2 of the Internal Revenue Code.
(F) In the case of the following, the standard deduction
referred to in subparagraph (A) of this paragraph shall be zero:
(i) A husband or wife filing a separate return where the other
spouse has claimed itemized deductions under subparagraph (A) of
this paragraph;
(ii) A nonresident alien individual;
(iii) An individual making a return for a period of less than
12 months on account of a change in the individual's annual
accounting period;
(iv) An estate or trust;
(v) A common trust fund; or
(vi) A partnership.
(d) For the purposes of paragraph (c)(A) of this subsection,
the taxpayer's itemized deductions are the { - sum of: - }
{ - (A) - } { + amount of + } the taxpayer's itemized
deductions as defined in section 63(d) of the Internal Revenue
Code (reduced, if applicable, as described under section 68 of
the Internal Revenue Code) minus the deduction for Oregon income
tax (reduced, if applicable, by the proportion that the reduction
in federal itemized deductions resulting from section 68 of the
Internal Revenue Code bears to the amount of federal itemized
deductions as defined for purposes of section 68 of the Internal
Revenue Code) { + . + } { - ; and - }
{ - (B) The amount that may be taken into account under
section 213(a) of the Internal Revenue Code, not to exceed seven
and one-half percent of the federal adjusted gross income of the
taxpayer, if the taxpayer has attained the following age before
the close of the taxable year, or, in the case of a joint return,
if either taxpayer has attained the following age before the
close of the taxable year: - }
{ - (i) For taxable years beginning on or after January 1,
1991, and before January 1, 1993, a taxpayer must attain 58 years
of age before the close of the taxable year. - }
{ - (ii) For taxable years beginning on or after January 1,
1993, and before January 1, 1995, a taxpayer must attain 59 years
of age before the close of the taxable year. - }
{ - (iii) For taxable years beginning on or after January 1,
1995, and before January 1, 1997, a taxpayer must attain 60 years
of age before the close of the taxable year. - }
{ - (iv) For taxable years beginning on or after January 1,
1997, and before January 1, 1999, a taxpayer must attain 61 years
of age before the close of the taxable year. - }
{ - (v) For taxable years beginning on or after January 1,
1999, a taxpayer must attain 62 years of age before the close of
the taxable year. - }
(2)(a) There shall be subtracted from federal taxable income
any portion of the distribution of a pension, profit-sharing,
stock bonus or other retirement plan, representing that portion
of contributions which were taxed by the State of Oregon but not
taxed by the federal government under laws in effect for tax
years beginning prior to January 1, 1969, or for any subsequent
year in which the amount that was contributed to the plan under
the Internal Revenue Code was greater than the amount allowed
under this chapter.
(b) Interest or other earnings on any excess contributions of a
pension, profit-sharing, stock bonus or other retirement plan not
permitted to be deducted under paragraph (a) of this subsection
shall not be added to federal taxable income in the year earned
by the plan and shall not be subtracted from federal taxable
income in the year received by the taxpayer.
(3)(a) Except as provided in subsection (4) of this section,
there shall be added to federal taxable income the amount of any
federal income taxes in excess of the amount provided in
paragraphs (b) to (d) of this subsection, accrued by the taxpayer
during the taxable year as described in ORS 316.685, less the
amount of any refund of federal taxes previously accrued for
which a tax benefit was received.
(b) The limits applicable to this subsection are:
(A) $5,500, if the federal adjusted gross income of the
taxpayer for the tax year is less than $125,000, or, if reported
on a joint return, less than $250,000.
(B) $4,400, if the federal adjusted gross income of the
taxpayer for the tax year is $125,000 or more and less than
$130,000, or, if reported on a joint return, $250,000 or more and
less than $260,000.
(C) $3,300, if the federal adjusted gross income of the
taxpayer for the tax year is $130,000 or more and less than
$135,000, or, if reported on a joint return, $260,000 or more and
less than $270,000.
(D) $2,200, if the federal adjusted gross income of the
taxpayer for the tax year is $135,000 or more and less than
$140,000, or, if reported on a joint return, $270,000 or more and
less than $280,000.
(E) $1,100, if the federal adjusted gross income of the
taxpayer for the tax year is $140,000 or more and less than
$145,000, or, if reported on a joint return, $280,000 or more and
less than $290,000.
(c) If the federal adjusted gross income of the taxpayer is
$145,000 or more for the tax year, or, if reported on a joint
return, $290,000 or more, the limit is zero and the taxpayer is
not allowed a subtraction for federal income taxes under ORS
316.680 (1) for the tax year.
(d) In the case of a husband and wife filing separate tax
returns, the amount added shall be in the amount of any federal
income taxes in excess of the amount provided for individual
taxpayers under paragraphs (a) to (c) of this subsection, less
the amount of any refund of federal taxes previously accrued for
which a tax benefit was received.
(e) For purposes of this subsection, the limits applicable to a
joint return shall apply to a head of household or a surviving
spouse, as defined in section 2(a) and (b) of the Internal
Revenue Code.
(f)(A) For a calendar year beginning on or after January 1,
2008, the Department of Revenue shall make a cost-of-living
adjustment to the federal income tax threshold amounts described
in paragraphs (b) and (d) of this subsection.
(B) The cost-of-living adjustment for a calendar year is the
percentage by which the monthly averaged U.S. City Average
Consumer Price Index for the 12 consecutive months ending August
31 of the prior calendar year exceeds the monthly averaged index
for the period beginning September 1, 2005, and ending August 31,
2006.
(C) As used in this paragraph, 'U.S. City Average Consumer
Price Index' means the U.S. City Average Consumer Price Index for
All Urban Consumers (All Items) as published by the Bureau of
Labor Statistics of the United States Department of Labor.
(D) If any adjustment determined under subparagraph (B) of this
paragraph is not a multiple of $50, the adjustment shall be
rounded to the next lower multiple of $50.
(E) The adjustment shall apply to all tax years beginning in
the calendar year for which the adjustment is made.
(4)(a) In addition to the adjustments required by ORS 316.130,
a full-year nonresident individual shall add to taxable income a
proportion of any accrued federal income taxes as computed under
ORS 316.685 in excess of the amount provided in subsection (3) of
this section in the proportion provided in ORS 316.117.
(b) In the case of a husband and wife filing separate tax
returns, the amount added under this subsection shall be computed
in a manner consistent with the computation of the amount to be
added in the case of a husband and wife filing separate returns
under subsection (3) of this section. The method of computation
shall be determined by the Department of Revenue by rule.
(5) Subsections (3)(d) and (4)(b) of this section shall not
apply to married individuals living apart as defined in section
7703(b) of the Internal Revenue Code.
(6)(a) For tax years beginning on or after January 1, 1981, and
prior to January 1, 1983, income or loss taken into account in
determining federal taxable income by a shareholder of an S
corporation pursuant to sections 1373 to 1375 of the Internal
Revenue Code shall be adjusted for purposes of determining Oregon
taxable income, to the extent that as income or loss of the S
corporation, they were required to be adjusted under the
provisions of ORS chapter 317.
(b) For tax years beginning on or after January 1, 1983, items
of income, loss or deduction taken into account in determining
federal taxable income by a shareholder of an S corporation
pursuant to sections 1366 to 1368 of the Internal Revenue Code
shall be adjusted for purposes of determining Oregon taxable
income, to the extent that as items of income, loss or deduction
of the shareholder the items are required to be adjusted under
the provisions of this chapter.
(c) The tax years referred to in paragraphs (a) and (b) of this
subsection are those of the S corporation.
(d) As used in paragraph (a) of this subsection, an S
corporation refers to an electing small business corporation.
(7)(a) The taxpayer shall be entitled to an additional amount,
as referred to in subsection (1)(c)(A) and (D) of this section,
of $1,000:
(A) For the taxpayer if the taxpayer has attained age 65 before
the close of the taxpayer's taxable year; and
(B) For the spouse of the taxpayer if the spouse has attained
age 65 before the close of the taxable year and an additional
exemption is allowable to the taxpayer for such spouse for
federal income tax purposes under section 151(b) of the Internal
Revenue Code.
(b) The taxpayer shall be entitled to an additional amount, as
referred to in subsection (1)(c)(A) and (D) of this section, of
$1,000:
(A) For the taxpayer if the taxpayer is blind at the close of
the taxable year; and
(B) For the spouse of the taxpayer if the spouse is blind as of
the close of the taxable year and an additional exemption is
allowable to the taxpayer for such spouse for federal income tax
purposes under section 151(b) of the Internal Revenue Code. For
purposes of this subparagraph, if the spouse dies during the
taxable year, the determination of whether such spouse is blind
shall be made immediately prior to death.
(c) In the case of an individual who is not married and is not
a surviving spouse, paragraphs (a) and (b) of this subsection
shall be applied by substituting '$1,200' for '$1,000. '
(d) For purposes of this subsection, an individual is blind
only if the individual's central visual acuity does not exceed
20/200 in the better eye with correcting lenses, or if the
individual's visual acuity is greater than 20/200 but is
accompanied by a limitation in the fields of vision such that the
widest diameter of the visual field subtends an angle no greater
than 20 degrees.
(8) In the case of an individual with respect to whom a
deduction under section 151 of the Internal Revenue Code is
allowable for federal income tax purposes to another taxpayer for
a taxable year beginning in the calendar year in which the
individual's taxable year begins, the basic standard deduction
(referred to in subsection (1)(c)(B) of this section) applicable
to such individual for such individual's taxable year shall equal
the lesser of:
(a) The amount allowed to the individual under section 63(c)(5)
of the Internal Revenue Code for federal income tax purposes for
the tax year for which the deduction is being claimed; or
(b) The amount determined under subsection (1)(c)(B) of this
section.
SECTION 4. { + Section 2 of this 2012 Act and the amendments
to ORS 316.695 by section 3 of this 2012 Act apply to tax years
beginning on or after January 1, 2012. + }
SECTION 5. Section 7, chapter 746, Oregon Laws 2009, is amended
to read:
{ + Sec. 7. + } (1) The amendments to ORS 316.037 by section
1 { + , chapter 746, Oregon Laws 2009, + } { - of this 2009
Act - } apply to tax years beginning on or after January 1,
2009, and before January 1,
{ - 2012 - } { + 2014 + }.
(2) The amendments to ORS 316.037 by section 2 { + , chapter
746, Oregon Laws 2009, + } { - of this 2009 Act - } apply to
tax years beginning on or after January 1, { - 2012 - } { +
2014 + }.
SECTION 6. { + Notwithstanding ORS 171.072 and 292.311, for
the period beginning on the effective date of this 2012 Act and
ending on June 30, 2013, the salaries of the members of the
Legislative Assembly, the Governor, the Secretary of State, the
State Treasurer, the Attorney General, the Commissioner of the
Bureau of Labor and Industries and the Superintendent of Public
Instruction are reduced by an amount equal to five percent of the
amount of the annual salary otherwise due as provided by law. + }
SECTION 7. { + This 2012 Act takes effect on the 91st day
after the date on which the 2012 regular session of the
Seventy-sixth Legislative Assembly adjourns sine die. + }
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