Portland General Electric's Pollution Tax Breaks
PGE has been the biggest beneficiary in Oregon of pollution tax credits that allow it to write off as much as 50 percent of the cost of equipment or renovations to reduce pollution. Yet the credits simply reward the power company for complying with existing federal and state anti-pollution laws and do nothing to reduce pollution.
In 2002, the credits reduced PGE's tax liability by $1.1 million, and from their inception through 1998, the credits were worth nearly $76 million to them. The credits played a factor in PGE's $10 state income tax bill for 2002, though the company reported earnings of $66 million. Recently, the Oregon House with HB 2652 extended the pollution tax credits until 2014, adding items such as wood chippers, storage bins and forklifts to the list of qualifying equipment, along with extending the credits to businesses that produce alternative fuels.
Because the tax credits provide a direct reduction in tax bills, they're more valuable than deductions, which only reduce the amount of income that's taxed. A $1 million tax credit is equivalent to a $15.2 million deduction using the standard corporate income tax rate of 6.6 percent.
The Pollution Control Tax Credit program was put into place in 1967 to ease the impact of the Clean Water Act and other federal regulations and since has become Oregon's biggest business-oriented tax break. The program cost the state $23.2 million in revenue in the 1995-1997 budget period, and an estimated $19.6 million in the 1997-99 biennium, according to the Oregon Revenue Department.
Other states limit their tax breaks to specific kinds of equipment (recycling facilities, clean-fuel vehicles, etc.) and limit the dollar amount of each break or the time period for eligible investments. Oregon on the other hand, allows virtually any expenditure associated with pollution control to earn a tax credit and sets no cap on a credit's value. There's also no requirement that the investment exceed, rather than simply comply with, state or federal standards.
According to a state tax expenditure report, 75 percent of all tax credits approved under the program since 1995 were for pollution control equipment that would have been installed anyway.
By using this credit, PGE effectively increases everyone else's share of the total tax burden. As State Representative Mike Schaufler put it in describing PGE's Texas-based owner, “I'll be darned if I want to hand out millions of dollars to a bunch of thieves down in Houston who are under indictment for stealing from the ratepayers of Oregon."
Clackamas Public Power