A gross receipts tax? Oregon already has one

Chuck Sheketoff

The Oregon House leadership should be commended for putting forward a bold revenue proposal that would improve the lives of Oregonians. Their Oregon Education Investment Initiative would not only help fill the existing budget gap, but also result in about $2 billion in new investments, mostly in education — from pre-K to higher education. The funds would come from a tax on gross receipts for businesses with Oregon sales above $5 million a year. The proposal would also eliminate the corporate income tax and reduce the personal income taxes of low- and middle-income Oregonians.

For some, talk of a gross receipts tax is a non-starter.

They may be surprised to learn that Oregon already has a gross receipts tax. More than two-thirds of all C-corporations already pay taxes based on their Oregon sales, not profits.

These businesses pay Oregon’s corporate minimum tax. It’s a tax based on gross receipts, and it kicks in when it exceeds a corporation’s tax under the profits tax. This structure has been in place since 2009, after Oregon voters enacted Measure 67. While it’s a very modest gross receipts tax, nonetheless it’s a tax based on Oregon sales.

It may also surprise some to learn that Oregon’s existing gross receipts tax came from a proposal initially floated by the Oregon Business Association in 2009.

The Oregon Education Investment Initiative unveiled last week is certainly bold, but not novel in its use of a gross receipts tax. More than two-thirds of corporate taxpayers have been paying taxes based on sales, not profits, for some time now.

Oregon Center for Public PolicyChuck 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.

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