What’s the Oregon Business Association afraid of?

Chuck Sheketoff

With the state Senate about to vote to improve the tax system, why is the Oregon Business Association afraid of seeing Oregon’s tax system being made more fair by getting rid of the $10 corporate minimum tax and adding new top rates for very profitable corporations and the wealthiest individuals?

The reality is that corporate Oregon is getting off easy.

In 1973-75 business income taxes were 18.5 percent of all income taxes.

This biennium they are 6.3 percent of total taxes.

After the two tax bills are implemented, in 2013-15 the corporate income tax will be just 6.5 percent of all income taxes. Then, Oregon corporate taxes will bring in an estimated $1.14 billion.

If corporate Oregon paid the same share of taxes in 2013-15 that they paid in 1973-75, we’d be getting $3.69 billion, or $2.6 billion more than we now anticipate if the tax bills pending in the Senate are enacted.

In other words, $2.6 billion less than what corporations would have paid had we been doing as good a job collecting taxes as we did in 1973-75. That’s why corporate Oregon is getting off easy.

Ocpp_final_1 Chuck Sheketoff is the executive director of the Oregon Center for Public Policy.   You can sign up to receive email notification of OCPP materials at www.ocpp.org

  • Corporation Nation (unverified)

    Funny how corporations want all the rights of people but none of the responsibilities of citizens.

    Shame on OBA. I thought they were supposed to be the corporate cabal that was FOR things. Looks like they are quickly becoming the new AOI: oppositional and irrelevant.

  • George Anonymuncule Seldes (unverified)

    I have nothing good to say about these guys, but I note how many "progressives" argued themselves hoarse against a hike in the beer tax. I guess it all depends on whose ox is being gored.

  • Boats (unverified)

    They are rightly concerned about being permanently soaked for a temporary period of economic distress. After all, when was the last time you saw an Oregon Democratic majority slash spending to trigger a kicker or ever kill a tax?

  • Jeremy Rogers (unverified)

    Oregon is blessed to have moderate business groups like OBA. The fact that they oppose a permanent tax hike during a recession makes sense: what if someone proposed that we should make permanent the level of service cuts that we are administering this session? Absurd, right?

    Well its the same thing for taxes. Taxes are a means to pay for a population's desired level of services. No one has a clear ahead about what those levels should be-on either side- amidst a recession.

    Make the taxes temporary. Repeal the kicker. Expand the rainy day fund. Then have the conversation about what level of services and taxes are desired. This is fair.

  • mp97303 (unverified)

    If the funding crisis is as bad as they say, why don't we implement a $10 or $100 or whatever min tax on individual taxpayers as well. WITT right???

  • Jeremy Rogers (unverified)


    OBA has been a champion of the public interest (yes, the public interest includes the interest of those who provide jobs) since its founding. The demonizing of OBA on this site is sooooo counterproductive. OBA is a partner on so many key issues. Why is there a desire to alienate them simply because they prefer a temporary solution to filling a temporary budget gap?

  • (Show?)

    The tax proposals have temporary provisions to deal with the current fiscal crisis, and "permanent" provisions to deal in a small way with the fundamental problem that Oregon has been facing even in the best of economic times: a tax system where the wealthy pay a smaller share of their income in state and local taxes than low and middle income Oregonians, and corporations that don't carry enough of the tax load relative to individuals. The latter point is addressed by this post.

    Jeremy's theory ignores the fact that we have had a structural deficit and the reality of corporations and the wealthy not picking up a fair share. The OBA plan would hurt small businesses and people far down the income scale. Its only redeeming feature is that the pain it would cause and exacerbation of the inequity in our system is that it was temporary.

  • Mary Nolan (unverified)

    mp97 asked why we don't also impose a surcharge on indifivual taxpayers as well. Chuck's post here and mine earlier specifically address the corporate income tax part of the budget balancing plan. Neither was designed to give the whole picture. There are three other parts of the budget-balancing plan put forth by Democratic leadership in the legislature:

    1. Cut costs. We propose to make up about half the budget deficit this way. Some of that can be achieved by improving efficiencies and reducing costs (read that, services) in less visible areas. But make no mistake, in order to cut $2 billion in costs, we will have to reduce some services that people and businesses will indeed notice -- like fewer public access hours at courts, fewer teachers in nearly every local school district (meaning either more students in each class room or fewer days of classroom instruction), and slower completion of some police work (like forensics tests and such). There will be similar very selective cuts in services across state agencies and our local support of county, city and school district programs. Indeed, we will cut over 1,700 jobs from state agencies, hundreds more from local school districts, and thousands more from the non-profit contractors we engage to provide home health care and other important services. Don't believe for a minute that we aren't tightening the belts for thousands of Oregonians who rely on public services to stay healthy, secure and productive. Why is it that when a local business cuts 100 or 500 jobs, the headlines declare catastrophe but when a school district or hospital or police department cut 100 jobs, no one seems to worry about the economic hit that local community suffers?

    2. Use of one-time funds, including federal stimulus dollars and some withdrawal of reserve funds. We propose to make up about 30% of the budget gap this way. Let's remember, then, that if over $1 billion of our revenues for this budget period will be essentially taken from the piggy bank, that's not ongoing income. It's like paying for your rent out of the gift Aunt Tilly left you in her will. Once Tilly's money is gone, you still have rent to pay and where will it come from next year?

    3. Changing our tax code to replace some of the revenue lost because of the global recession. We propose that only 20% of the gap be made up with these tax increases. Of the revenue increases the House passed yesterday (and the Senate will pass tomorrow), about one third will come from corporations and two thirds from individual (household) taxpayers. So, yes, our plan includes a sharing of burden between corporate taxpayers and individual/household taxpayers. In both cases, we are asking those who benefit the most from robust public schools and universities, a dependable public safety and court system, and a stable civil society to pay 1-2% more just on the amount of their business net profit that is over $250,000 or their joint adjusted gross income over $250,000.

    I'd call this plan balanced all the way around. Over the last three months, we have modified our budget-balancing package in many significant ways to take into account input from citizens, business leaders, teachers, and others. Perfect? Not by a long stretch. But from the starting point of the hole Oregon has dug itself into over the last 25 years (thanks mostly to a series of disjointed initiative petitions), we're implementing a fair, thoughtful plan that makes a very good first step in the right direction.

  • Jeremy Rogers (unverified)


    If the concern is over a structural deficit in Oregon's tax and revenue system, here are a few options that will have a greater impact than the proposed permanent tax increases, and that both business and labor groups support:

    1) Repeal the kicker and put it in a rainy day fund

    2) Apply a "balanced budget" rule to ballot measures

    3) Conduct long-term budgeting with both revenue and expenditures in mind.

    The kicker kicked last year just as the recession began. We mailed $1.2 billion back to taxpayers rather than saving it for this downturn. Why should we create permanent new tax brackets and permanently raise the corporate income tax rate when we haven't addressed the basics like the kicker and the ballot measure reforms, even though there is strong support to do both of these from OBA and other business groups?

    If we need to raise money now, enact a temporary increase. If you want to fix structural problems, start with these common sense reforms that have the support of business and labor.

  • Jay Bozievich (unverified)


    Who pays Corporate Taxes?

    (Hint: It is not the corporation.)

    Corporate taxes are regressive.

  • Kell (unverified)

    Vancouver loves us. http://www.sbsc.org/businesstaxindex2009/

  • debt reduction (unverified)

    o well someone needs to fix it

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