Our OSCC lobbyists are at work analyzing the 1,500 bills that have been introduced to date in the state legislature.
a list of major revenue-related proposals that are drawing attention in Salem.
Gross receipts tax (GRT): Despite voters’ overwhelming rejection of
Measure 97 in 2016, this concept remains a favorite of some influential
legislators. Portland voters approved a citywide gross receipts tax on large
businesses in November. The existence of a GRT in Portland will give proponents
a toehold to push for a similar approach statewide. However, a GRT remains a
particularly difficult tax for low-margin businesses, regardless of size.
Business activities tax: The Oregon Business Plan has floated a
business activities tax (BAT) as an alternative to a GRT. The BAT, used in
Washington, does not create the same concerns about pyramiding (being applied
multiple times in the supply chain) as the GRT. However, it still would raise
business costs and, depending on details of a specific proposal, could affect
some businesses more than others.
Corporate tax rates: If neither of those ideas gathers support of 60 percent of both
chambers, the Legislature could default to keeping the current tax structure
and increasing the corporate tax rate. Meanwhile, the Governor’s budget
proposes an increase in the corporate minimum tax.
Small-business taxes: Small businesses have been in the crosshairs of
revenue hunters in the Legislature for the past two sessions. In 2017, the
House voted to roll back portions of the small-business tax deal that were part
of the 2013 “grand bargain,” but the bill failed in the Senate. In
the 2018 short session, the Legislature disconnected from a portion of the new
federal tax law that benefited small business. Senators Brian Boquist
(R-Dallas) and Herman Baertschiger (R-Grants Pass) have sued, contending that
legislation violates the state Constitution. Meanwhile, Governor Brown, who is
named in the lawsuit, has proposed more rollbacks of small-business tax
benefits – trimming a tax break that passed in the 2018 session with her
Other business taxes and fees: The long list of
legislative concept drafts presented in the House Revenue Committee last week
during Legislative Days includes an assortment of technical tax adjustments
that would increase taxes paid by businesses. Also, some tax credits could be
eliminated through the tax credit review process.
Kicker reform: The idea of ending or diverting the “kicker,” which
returns money to individual taxpayers when revenues exceed state economists’
projections by more than 2 percent, has been kicked around for years. In 2012,
Oregonians voted to designate the corporate kicker for education funding. Now,
similar proposals to use the personal kicker for targeted uses such as PERS or
education, have support. Kicker reform is one revenue option included in the
latest version of the Oregon Business Plan, which was unveiled earlier this
Property taxes: The discussion about reforming Oregon’s property tax system has
amplified in recent months. The goal would be to eliminate inequities that lead
to landowners with similar properties paying differing rates. Even by revenue
reform standards, this would be a complicated process, and, therefore, is less
likely than some of the other revenue proposals. However, targeted bills aimed
at businesses’ property taxes could gain traction. For example, one bill would
limit the property tax exemption for nonprofit hospitals to the amount spent on
charitable care, reduced by the sum of all amounts of compensation reported in
excess of $1 million for any individual directors or employees.
Alcohol and tobacco taxes: Increasing tobacco taxes is a common revenue
proposal, one that is included in the Governor’s budget. Although the Governor
has backed off of talk of a higher beer and wine taxes, her budget does propose
increasing alcohol costs another way – by increasing the markup on liquor at
state stores by 5 percent.
Medicaid taxes: The Governor’s budget proposes a mix of taxes and fees to make up
for a projected shortfall in Medicaid funding. The money would come from:
increased hospital taxes, expanded taxation of health insurance plans, higher
cigarette taxes and an assessment on businesses with a large share of employees
who qualify for Medicaid.
Transportation taxes: The 2017 Legislature passed a transportation
package, and taxes to pay for improvements are beginning to kick in. These
include increases in gas taxes, higher registration and title fees, a 0.1 percent
payroll tax, a bicycle excise tax, and in 2020 a new way of treating vehicle
fees based on miles per gallon.
Carbon taxes: Representatives of the Governor’s office presented a carbon-price
proposal to the Joint Committee on Carbon Reduction during Legislative Days
last week. The model being discussed is a cap-and-trade system. Dozens of
decisions remain that will determine the cost of this program to businesses,
but under any scenario there will be significant costs. The question, is which
businesses and consumers will pay, and how much. If a cap-and-trade bill
passes, higher fuel and energy costs are all but certain.
you can see, raising revenue will be one of the dominant themes of the 2019
We will keep members apprised as the discussions roll out.