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1.315 MOBILE HOME TENANT PAYMENT Oregon Statute: 316.795 and 317

Sunset Date: None Year Enacted: 2007

Corporation Personal Total

2011–13 Revenue Impact: Less than $100,000 Less than $100,000 Less than $100,000 2013–15 Revenue Impact: Less than $100,000 Less than $100,000 Less than $100,000 DESCRIPTION: Under ORS 90.505 to 90.840, an owner of a manufactured dwelling park is required

to pay each manufactured dwelling homeowner between $5,000 and $9,000 if the homeowner is forced to relocate or abandon their property due to the park’s closure. This subtraction allows the homeowner to subtract the payment from Oregon taxable income.

The payment amount depends on the size of the dwelling. The owner of a single-wide manufactured dwelling will receive $5,000; the owner of a double-wide

manufactured dwelling will receive $7,000; and the owner of a triple-wide manufactured dwelling will receive $9,000.

PURPOSE: The statutes that allow this expenditure do not explicitly state a purpose. Presumably, the purpose is to provide tax relief to manufactured dwelling residents who are forced to relocate because of the closure of the manufactured dwelling park.

WHO BENEFITS: Residents of closed manufactured dwelling parks who receive payments from the park owners. For tax year 2010, very few personal income taxpayers claimed this subtraction.

EVALUATION: Not evaluated.

1.316

SERVICE IN VIETNAM ON MISSING STATUS

Oregon Statute: 316.074 Sunset Date: None Year Enacted: 1973

Corporation Personal Total

2011–13 Revenue Impact: Not Applicable $0 $0

2013–15 Revenue Impact: Not Applicable $0 $0

DESCRIPTION: This statute exempts personal income from all sources for individuals who were classified as missing during the Vietnam conflict. The exemption applies to income received during months when the individual was in a missing status.

PURPOSE: The statute that allows this expenditure does not explicitly state a purpose. Presumably, the purpose is to provide tax relief to individuals (and their families) who were classified as missing during the Vietnam conflict.

WHO BENEFITS: No one utilizes this exemption. There are no longer any known Oregonians who earned income while classified as missing as a result of the Vietnam conflict. EVALUATION: Not evaluated.

1.317

FILM PRODUCTION LABOR REBATE

Oregon Statute: 316.698 and 317.394 Sunset Date: 12-31-2017

Year Enacted: 2005, Modified in 2011 (HB 3672)

Corporation Personal Total

2011–13 Revenue Impact: $500,000 Less than $100,000 $500,000

2013–15 Revenue Impact: $700,000 Less than $100,000 $700,000

DESCRIPTION: Labor rebate payments are excluded from taxation for individuals or corporations that incur $1 million or more in actual expenses for film, commercial or television show production in Oregon. The Oregon Film and Video Office (OFVO) certifies persons or businesses engaging in qualifying film production as eligible for the labor rebate if it is reasonably likely that the person or business will incur actual expenses of at least $1 million. Upon completion of the film production, OFVO verifies actual expenses and disallows the rebate if actual expenses are less than $1 million.

The labor rebate is equal to 6.2 percent of the payroll, for which Oregon withholding applies, paid during qualifying film production. The amounts withheld are paid to the Department of Revenue and then transferred to the Greenlight Oregon Labor Rebate Fund (GOLRF).

Legislation in 2011 extended the scheduled sunset of the provision from December 31, 2011 to December 31, 2017.

PURPOSE: The statutes that allow this expenditure do not explicitly state a purpose. Presumably, the purpose of this expenditure is to encourage more film, television and television commercial production in the state of Oregon.

WHO BENEFITS: Persons and businesses engaging in film production with expenses over $1 million. The Department transferred almost $1.7 million to the GOLRF in fiscal year 2011 and about $5.6 million to the GOLRF in fiscal year 2012.

EVALUATION: by the Oregon Film and Video Office

This tax expenditure achieves its purpose of recruiting film production in the state and generating associated spending and employment. Without this program, there would undoubtedly be a drop in activity for Oregon's film, television and commercial industry.

The Greenlight Oregon Labor Rebate, in tandem with the Oregon Production Investment Fund, is integral in Oregon's ability to compete with the 40 other US states that offer production incentives and is directly responsible for the $130 million of out-of-state film, television and commercial production spending that was

recorded in calendar year 2011. This number was the highest number to date. In addition to helping recruit out-of-state productions into Oregon, this program also supports Oregon's indigenous commercial production industry. Combined, these two production sectors account for over $425 million in direct production output and impact nearly 9,000 jobs. Perhaps the most important result of the Greenlight

program and the Oregon Production Investment fund is that the two programs have made it possible for Oregon to maintain a deep and talented workforce as well as necessary infrastructure.

1.318

ENERGY CONSERVATION SUBSIDIES (OREGON)

Oregon Statutes: 316.744 and 317.386 Sunset Date: None

Year Enacted: 1981

Corporation Personal Total

2011–13 Revenue Impact: Less than $100,000 Not Applicable Less than $100,000 2013–15 Revenue Impact: Less than $100,000 Not Applicable Less than $100,000 DESCRIPTION: Subsidies provided by publicly and investor-owned utilities for the purchase or

installation of an energy conservation device under Residential Energy Conservation Act (ORS 469.631–469.687) can be excluded from corporate and personal taxable income.

For personal income taxpayers, federal law already exempts these payments for residential energy customers from personal taxable income; see1.040, Energy Conservation Subsidies (Federal). Therefore, under current federal law this tax expenditure does not apply to personal income tax. These subsidies to corporations are not exempt at the federal level and therefore can be excluded from their Oregon taxable income.

PURPOSE: The statutes that allow this expenditure do not explicitly state a purpose. Presumably, the purpose is to promote energy conservation by encouraging corporate owners of rental housing to participate in conservation programs sponsored by utilities, and to install energy-conserving devices.

WHO BENEFITS: Owners of rental housing who receive cash payments from utilities as part of energy conservation programs.

EVALUATION: Not evaluated.

1.319

WET MARINE AND TRANSPORTATION POLICIES

Oregon Statute: 317.080(8) Sunset Date: None

Year Enacted: 1995

Corporation Personal Total

2011–13 Revenue Impact: $400,000 Not Applicable $400,000

2013–15 Revenue Impact: $400,000 Not Applicable $400,000

DESCRIPTION: Foreign or alien insurers (those formed under the laws of a state other than Oregon or a country other than the United States) that write wet marine and transportation (often

marine and transportation insurance pay a tax based upon underwriting profits (net wet marine and transportation premiums less losses incurred and related expenses) from these policies pursuant to ORS 731.824. This tax revenue goes to the General Fund. As described in ORS 731.194, wet marine and transportation insurance covers:  The insurance of ships and freight

 The insurance of personal property in transport between countries or transported by coast or inland waterways

 The insurance of railroads and aircraft along with their freight while engaged in interstate transport or commerce.

PURPOSE: The statute that allows this expenditure does not explicitly state a purpose. Presumably, the purpose is to conform to other states' tax treatment of wet marine and transportation insurers.

WHO BENEFITS: Foreign or alien insurers who sell wet marine and transportation policies and potentially their policyholders who include ports and interstate transportation carriers, including marine, railroad, and aircraft, benefit by reducing the cost of providing these transportation services.

IN LIEU: A 5 percent tax is imposed on the average wet marine insurance underwriting profit during the previous three years. For calendar year 2011, 75 ocean marine insurers had premium; 49 of these insurers paid about $143,500 in tax based on underwriting profits from writing wet marine and transportation insurance.

EVALUATION: by the Department of Consumer and Business Services

Wet marine and transportation insurers have been taxed only on their underwriting profit since at least 1928. Wet marine and transportation is subject to federal law and treaty. Taxing wet marine and transportation insurers based on underwriting profit rather than gross premium helps to achieve uniformity among states. This method of taxation ultimately benefits parties that purchase this type of insurance, such as ports and interstate transportation carriers, including marine, railroad, and aircraft, by reducing the cost of insurance (if the insurer passes the savings on to the insured). If this tax expenditure was eliminated, Oregon would have a unique tax structure compared to other states. If the tax subtraction where repealed, it could potentially put the policy holders at a competitive disadvantage with other states.

1.320

HYDROELECTRIC DAM AND WATERWAY WORKERS

Federal Law: USC 46, Sect. 11108 (P.L. 106-489), USC 4 sect. 111 (P.L. 105-261) Oregon Statute: 316.127(8)(10)

Sunset Date: None Year Enacted: 1997

Corporation Personal Total

2011–13 Revenue Impact: Not Applicable Not Available Not Available 2013–15 Revenue Impact: Not Applicable Not Available Not Available DESCRIPTION: Under federal law enacted in 1998 (P.L.105-261), Oregon cannot tax nonresident

River. In 2001, compensation earned by all nonresident dam workers on the

Columbia, not just the federal employees working at the dams was made nontaxable. Under federal law enacted in 2001 (P.L. 106-489), Oregon cannot tax nonresidents working on ships that operate on navigable waters of more than one state.

PURPOSE: The statute that allows this expenditure does not explicitly state a purpose.

Presumably, the purpose is to comply with federal law and simplify tax compliance for nonresidents with regularly assigned duties in more than one state.

WHO BENEFITS: Nonresident workers at federal dams on the Columbia River and nonresident pilots, captains, and crews of boats operated on navigable waters of more than one state. EVALUATION: by the Department of Revenue

This expenditure complies with federal law and also relieves the specified taxpayers of the difficulty of determining the portion of income earned in Oregon while working on dams or ships in border river areas.

1.321

OREGON STATE LOTTERY PRIZES

Oregon Statute: 461.560 Sunset Date: None Year Enacted: 1985

Corporation Personal Total

2011–13 Revenue Impact: Not Applicable $700,000 $700,000

2013–15 Revenue Impact: Not Applicable $600,000 $600,000

DESCRIPTION: Oregon State Lottery (Lottery) prizes up to $600 are exempt from Oregon personal income tax. The $600 limit applies to a single play of a single game.

Originally, all prizes awarded by the Lottery were exempt from tax. In 1997, the Oregon Legislature changed the law so that only prizes up to and including $600 were exempt. However, individuals who purchased a winning ticket prior to January 1, 1998, may continue to subtract those winnings.

PURPOSE: The statute that allows this expenditure does not explicitly state a purpose.

Presumably, the purpose is to enable ease of play and prize redemption for Lottery game participants and to support ease of selling and prize payment for Lottery game retailers.

WHO BENEFITS: For tax year 2010, approximately 400 personal income taxpayers claimed an average subtraction of about $14,000 using this provision. Most of the benefit is derived from individuals subtracting winnings where the winning ticket was purchased prior to January 1, 1998. The table below shows usage of this subtraction for tax year 2010.

2010 Personal Income Tax Filers Below $12,100 30 $593 <$0.1 <$0.1 <1% $12,100 - $25,000 60 $1,036 $0.1 <$0.1 1% $25,000 - $44,100 80 $1,132 $0.1 <$0.1 1% $44,100 - $77,000 100 $2,227 $0.2 <$0.1 3% Above $77,000 110 $44,922 $4.9 $0.4 94%

All Full-Year Filers 380 $13,992 $5.3 $0.4 100%

Part-Year and

Nonresident Filers 10 $518 <$0.1 <$0.1

*Each income group contains 20 percent of the full-year filers (approximately 316,000)

Percent of Revenue Impact by Income Group Income Group of Full-Year Filers* Number of Filers Taking Subtraction Total Subtracted ($ millions) Revenue Impact ($ millions) Average Subtraction

EVALUATION: by the Oregon Lottery

This tax expenditure achieves its purpose and helps support the statutory purpose of the Lottery: to generate profits for the public purpose without imposing additional or increased taxes. Eliminating this tax expenditure would be a disincentive to players. Generally, approximately 85% percent of all Traditional Lottery prizes won are less than $600 and are paid to winners by a Statewide 1,600 retailer network. The remaining prizes above $600 are subject to reporting and taxation and/or

withholding. Since 2009, the Lottery has changed the prize mix on Video Lottery games offered to the public. In 2009 all Video Lottery prizes were under $600 and therefore not subject to taxation. These prizes were paid by 3,400 retailers throughout the State. In 2010 Lottery began awarding prizes above $600 which were subject to reporting and tax withholding for State purposes. In 2009, no W2G tax reporting documents were sent and reported to Oregon Department of Revenue (DOR) for Video Lottery, however, in 2012 (based on the number of prizes awarded above $600) 15,034 W2G’s were sent to DOR resulting in the remittance of $572,357 in tax withholding. As with Traditional prizes, the majority of video prizes (which are also under $600) are paid directly by Lottery retailers. Changing the taxation and reporting requirements for Video and Traditional prizes would require that winners travel to Salem to claim smaller prizes and would be a burden for both winners and the Lottery.

It stands to reason that many consumers would no longer play games if the tax exemption on prizes of $600 were eliminated, thereby significantly reducing sales and profits for the public purpose. Based on 2012 sales levels, if the subtraction were eliminated and the result was a 2% drop in sales, the impact on Video product sales alone would be a reduction in funds transferred to the Economic fund of $2 million for the ‘13/15 biennium. Combined with a similar estimated loss of Traditional product sales, the impact of the elimination of the exemption far exceeds the

projected revenue benefit that may result from elimination of the $600 exemption. In addition, there would be significant costs to program Lottery gaming systems, to send out reporting and withholding documents for the vast majority of prizes paid by the Lottery, and to process payments to players.

1.322

INCOME EARNED IN INDIAN COUNTRY

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