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DeFazio Urges Governor Brown, Oregon Legislature, to Ensure Federal Stimulus Payments Do Not Increase Tax Liability of Oregon’s Working Families

Feb 19, 2021
Press Release

After hearing from confused and angry constituents, Rep. Peter DeFazio (OR-04) today urged Governor Kate Brown, Oregon State Senate President Peter Courtney, and Oregon House of Representatives Speaker Tina Kotek to ensure that COVID-19 Economic Impact Payments (EIP) do not contribute to working-class Oregonians’ tax liabilities for 2020.

“It is unconscionable to ask the very families who have struggled the most during the COVID-19 crisis to include these payments in their tax liability,” said Rep. DeFazio. “These payments are a lifeline for Oregon’s working families, and while the ongoing pandemic has caused a budget shortfall for the state, the state should not ask these Oregonians to bear the brunt of that shortfall on their backs.”

Although Congress intended for EIPs to be tax-free, current Oregon state statute will result in hundreds of thousands of Oregonians being indirectly taxed at the state level. Data from the Oregon Legislative Revenue Office shows that EIPs included in the CARES Act that passed in March of 2020 will result in approximately 870,000 Oregonians seeing an increase in their state tax liability to the tune of more than $100 million.

This indirect tax will disproportionately impact individuals earning between $20,000 and $70,000 and families earning between $50,000 and $100,000 annually. The data estimates do not account for additional tax liabilities that will be owed as a result of EIPs that were disbursed after the most recent COVID relief bill was passed and signed into law at the start of the new year.

In the letter, DeFazio points out that the next COVID-19 relief bill—likely to be signed into law in the coming weeks—is estimated to include approximately $4.1 billion, including $2.6 billion given directly to the state, to help cover Oregon’s projected budget shortfall. DeFazio also points to more than $50 million in Federal Emergency Management Agency (FEMA) support, that he helped secure, that Oregon will be able to access for additional financial relief. 

Click here for a PDF version of DeFazio’s letter.