- Associated Press - Tuesday, April 24, 2018

SALEM, Ore. (AP) - Oregon Gov. Kate Brown announced Tuesday she will call a special legislative session May 21 to seek a tax break for small businesses in the state.

Brown previously said she would seek to broaden eligibility for existing tax breaks for small businesses when she signed a measure blocking a different tax break, which had been created as a ripple-effect of President Donald Trump’s 2017 federal tax reform. Brown said she would call a one-day session on the issue, but had not set a date.

The point of the special session would be to expand the types of businesses that can qualify for special treatment under Oregon tax law, to include sole proprietorships, Brown said Tuesday. Sole proprietorships include many of the smallest, most informal businesses, and are often chosen by independent contractors and others who don’t want or can’t afford more complicated business structures.

“An estimated 9,000 sole proprietorships could qualify and use this new opportunity to reinvest more of their profits into their businesses,” Brown said.

Republican leaders in the state Legislature reacted swiftly, reiterating earlier statements that the move amounted to political theater.

Brown had earlier said expanding the state tax break was a way to balance out her blocking of the Trump tax break.

Under the Trump tax reform, federal law was changed to create a large new deduction for so-called pass-through income, which includes income from some kinds of small businesses. But because Oregon uses federal figures to calculate its state taxes, some business owners had been set to benefit twice: once on their federal taxes, and once when the same deduction carried over onto their state taxes.

Brown signed a measure blocking the carry-over April 6, and at the same event announced she would use a special session to seek an alternative tax break that could be passed in time to let business owners include it on their 2018 taxes.

Republican legislators Tuesday criticized the earlier move, and questioned whether Brown’s plan would offer the same benefits.

“This so-called ‘emergency’ was caused by the governor and the majority party,” said Senate Republican minority leader Jackie Winters in a press release. Winters added that Republicans would work to make sure Brown’s plan would benefit as many businesses as possible.

A spokesman for Brown said early estimates show the measure would likely affect at least 9,000 businesses. Brown earlier said that the cost of the expanded state tax break would be less than the cost of allowing the Trump deduction to stand.

Nonpartisan state economists had said more than 60 percent of the benefit from the Trump overhaul would have gone to the wealthiest 5 percent of Oregonians. Brown earlier said she did not know whether benefits of the expanded state credit would be more equitably distributed.

Drafting and passing a piece of legislation in a single day would require a supermajority vote in the Legislature to suspend normal operating rules.

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