Oregon legislators, who are grappling with a $2 billion budget shortfall, said the federal SUV tax break is costing the state valuable tax income worth some $750,000 a year.

Jackie Dingfelder, one of the bill's sponsors, said this week that the bill only disconnects Oregon from a federal law that is abused by business owners.

"It makes good public policy for a number of reasons," Dingfelder said. "It encourages people to buy vehicles that create less pollution and it puts money back into the state coffers. It's a win-win."

Under the proposed legislation, which is making its way through Oregon's state Senate, businesses would be required to report triple the amount of their federal tax write-offs as income when they file their local tax returns.

The state law, if passed, would take effect from 2004 and apply only to larger SUVs rated over 6,000 pounds.

Farmers and construction workers would be exempted, Dingfelder said.

Auto dealers said the state's proposal was full of "smoke and mirrors" and said the bill would harm business growth at a time when small businesses are struggling.

"The whole idea of the federal government is to increase spending right now to quicken economic development," said Monty King, executive director of the Oregon Independent Auto Dealers Association.