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State revenue would go up under fed tax plan Friday Nov 17, 2017 at 11:01 PM Nov 18, 2017 at 12:49 AM Damian Mann Mail Tribune @reporterdm A massive tax reform package being debated in the U.S. Congress likely would put more money into Oregon coffers, and taxpayers would notice some major changes. "Federal taxes in all likelihood will go down overall, and there will be a slight increase in state income taxes," said Paul Warner, Oregon's legislative revenue officer. As the current tax reform package is proposed, Warner said, many middle-income taxpayers would see an overall slight decrease in taxes. The tax reform package developed by the House of Representatives is now in the hands of the U.S. Senate, which already has begun changing it, with more changes expected in coming weeks. "It is changing almost by the minute," Warner said. As of Friday, the Senate's proposal would delay until 2019 cuts to the corporate tax rate from 35 percent to 20 percent, one of the major features of the tax reform proposal. Even though the tax proposal is fluid, states across the country are analyzing what it means for them and individual taxpayers. According to the Federation of Tax Administrators, the standard deduction used by many low- to middle-income taxpayers would double under the proposal. The standard deduction for 2017 was $6,350, but under the tax reform proposal it would be $12,000. For a joint return, the deduction would increase from $12,700 to $24,000. Many Oregon income tax deductions are tied to federal taxes, so fewer federal tax deductions would lead to fewer state deductions, Warner said. As a result, state revenues could go up, he said. Along with the standard deduction increase, many deductions would be eliminated, such as contributions for moving expenses, tax preparation expenses and employee expenses. A Senate amendment already has changed the House deduction eliminations, including bringing back the moving expenses for members of the military. The Senate proposes keeping a medical expense deduction, which was eliminated in the House version. The deduction for property taxes would be capped at $10,000, and there are proposals that would drop or eliminate the mortgage deduction. Warner said the property tax cap would have the most impact in areas of the state such as Portland that have higher property values. Verenda Smith, deputy director of the Federation of Tax Administrators, which provides information to government tax agencies, including in Oregon, said many of the changes in the new plan will be phased out over a five-year period under the proposal. "More people will be paying more than they do now," Smith said. She based her statement on analyses done by other organizations who reviewed the tax reform package. She said the five years of changes will result in higher taxes compared to the first year of the tax reform package. Smith said it's not clear from the current Senate version of the tax reform which deductions would remain and which would go away over time. While the $10,000 cap for property taxes wouldn't hurt many Oregonians, Smith said property owners in other states would see an impact. Smith lives in Alexander, Virginia, and pays $10,200 annually in property taxes on what she describes as a modest 80-year-old house. The Senate version released Friday is only the beginning salvo in the changes likely to come before the tax reform package takes shape in the Senate. "You could make the argument that the House bill is no longer viable anymore," Smith said. — Reach reporter Damian Mann at 541-776-4476 or [email protected]. Follow him on www.twitter.com/reporterdm.