Oregon tax proposal: Tax more businesses, lower income tax
Oregon lawmakers next week will unveil a corporate tax overhaul akin to Measure 97 — the multi-billion-dollar tax hike proposal on big business that voters rejected in November — that may include new levies for almost all businesses and a scaled-back tax burden on low-income households.
With hiring freezes and other cost-cutting proposals now on the table to address the upcoming $1.6 billion budget shortfall, lawmakers are drafting the corporate tax-overhaul as a way to pump more revenue into state coffers. Their proposal would replace Oregon’s corporate income tax, among the nation’s lowest, with a Measure 97-like tax on businesses’ gross receipts, or revenues from business-to-business transactions for things like equipment and materials, beginning in 2018.
But what’s different about this plan is that it includes strategies to offset the “impact of higher consumer prices” by reducing personal income tax rates, among the nation’s highest and the state’s largest source of revenue, for low-wage Oregonian households. Personal income tax credits may also be expanded and standard deductions could go up, although the specifics are still unclear, according to a draft overview of the plan obtained by the Associated Press.
The proposal’s still-undetermined tax rate would be lower than what was proposed in Measure 97, and it would apply to nearly all businesses, not just the largest or certain types, according to the draft document.
Distribution centers, donations to nonprofits as well as transactions with government or among “closely related business entities” would be exempted from the tax, while tax credits would be available for pass-through entities, which are often defined as sole proprietorships.