Oregon Legislature looking at corporate tax to fund schools
Wednesday, April 24, 2019
Posted by: Beth Farmer
A variety of revenue measures are being considered in Salem this session, and one is a proposed corporate activities tax in the form of House Bill 3427. The OAN is following the negotiations over this bill closely and seeking input from members on how it would affect agricultural businesses. Such input will be passed on to legislators.
“This is another version of a gross receipts tax on businesses, and we’ve seen them before,” OAN Executive Director Jeff Stone said. “These proposals are bad for high cost, low margin businesses because they tax revenue rather than net profit. Affected companies would be forced to either pass the cost on to consumers or, more likely, absorb it out of their already thin margins. No matter how simply we convey our message, legislative leadership once again fails to understand that revenue does not equate profit. This proposal and a number of other policies being considered by the legislature will put Oregon’s nurseries at a severe disadvantage on a national and international level.”
Under the current amendments being considered, the bill would tax businesses taking in more than $1 million in taxable Oregon receipts, raising an estimated $2 billion in new revenue to fund K-12 education. Such businesses would pay 0.49 percent of receipts above $1 million, with a $250 minimum. Out-of-state wholesale sales would be exempt, and businesses would be able to deduct 25 to 50 percent of either business inputs or labor costs (currently under negoitation). The package would be paired with a slight reduction in personal state income taxes.
The bill is scheduled for a legislative work session in the Joint Committee on Student Success this week. In the meantime, the OAN Government Relations Team is looking for input from members on how the proposal would affect them and their particular business model. Members are invited to download an analysis of the bill (PDF) from OAN’s lobbying firm, Thorn Run Partners, and send comments to Jeff Stone at email@example.com.
This new tax would be in addition to the carbon cap-and-trade bill previously mentioned in the Member Update, as well as possibly other revenue measures under consideration. The Democratic Party has a supermajority in both chambers, making it possible to pass tax measures without any bipartisan support.