Cutting the capital gains tax – or, better yet, eliminating it – has been a cherished goal of Republican politicians for decades. Now John Kitzhaber, the once and maybe future governor of Oregon, is embracing it – but with a twist.
Kitzhaber, the leading Democratic candidate for governor, told The Associated Press he’s toying with the idea of deferring capital gains taxes provided the money is reinvested in enterprises that create Oregon jobs.
Kitzhaber conceded that such a step would reduce revenue in the short run, but said it “may gain you significant resources if it produces jobs.”
At 9% Oregon has one of the highest capital gains tax rates in the nation, and Kitzhaber said that encourages people with a lot of income from capital gains to establish residences outside of the state.
The tax proposal “shows that as voting in the May 18 primary gets under way, Kitzhaber” – who polls show is far ahead of Democratic rival Bill Bradbury – “is increasingly looking toward the fall election and a debate about how to create jobs.”
One of the two main contenders for the Republican nomination, businessman Allen Alley, has called for eliminating Oregon’s capital gains tax. His rival, former NBA player Chris Dudley, wants to reduce it.
Bradbury opposes any reduction in the capital gains tax. “This is the type of tax cuts for the rich we saw enacted by the Bush administration that led us from a record surplus to the worst economic recession since the Great Depression,” he said in a statement. “The evidence is very clear on this point – cutting taxes for the rich does not spur job creation.”
One thing seems sure: Whoever gets elected governor, he’s going to have a hard time making any kind of tax cut pencil out in the face of the huge budget shortfall the state’s likely to see.