Category Archives: Advocacy with Government

$2B Oregon Business Tax Plan Released


We know there is widespread anticipation and concern regarding the new $2 billion business tax being promoted by legislative leadership.

Last evening, the detailed plan was finally made public.

https://olis.leg.state.or.us/liz/2019R1/Downloads/ProposedAmendment/15752

At a high level, it is a 0.49% gross receipts tax with a 25% deduction for either business inputs or labor costs, whichever is greater. The tax applies to all business entities with gross sales in excess of $1 million.

Although this is a new 25-page tax bill that undoubtedly has many complexities, our understanding is that legislative leadership intends for the process to move quickly. There may be limited opportunity for input or to amend the bill.

In another area of concern, we also believe that the Governor/Governor’s office will be presenting her PERS pension reform package today at the noon hearing for Ways & Means Capital Construction subcommittee. We have reason to believe that a raid on SAIF resources and reserves will be a part of that discussion, but the particulars are not clear. We also anticipate their will be other fund “sweeps” to help buy down escalating PERS rates, particularly for schools.

Please stay tuned to our blog, facebook and email for other business impacting legislative updates.

$5B+ In New Taxes in Biennium Possible

Week 11 Oregon State Legislative Update – Brought to you through our membership in OSCC.

We want to reiterate four major tax hikes  are being pushed by legislative leaders which total over $5B in a biennium. As of now, all four proposals are serious and viable. Please get familiar with and distribute this infographic. It is the story of the 2019 Oregon legislature.

Health Care Tax (HB 2269), aka Employer Assessment Tax ($500M). This proposal would give the Oregon Department of Consumer and Business Services (DCBS) the authority to determine what every large employer (defined as 50+ employees who work an average of 8/hrs per week) should be spending on health care for employees and authorizes the agency to levy a tax on every employer that does not meet the agency’s minimum health care spending requirements. Agency leaders testified that the bill is designed to raise $500 million per biennium in new taxes.

OSCC strongly opposes this bill and joined other business associations in written testimony. OSCC was not allowed to testify in person. The bill now resides in the House Revenue Committee.

Paid Family Leave (HB 2005) – $1.5B. Legislative leaders have now introduced this bill as the newest and most refined effort to pass a paid family and medical leave system. Bottom line: the bill gives the Employment Department the authority to levy up to a 1% payroll tax on employers and a 1% income tax on employees to implement a 26-week per year paid family leave program. The bill would apply to all employers with at least one employee, guarantees employees position upon return and non-payroll benefits must be paid while on leave. The bill raises about $1.5 billion in new taxes every biennium to fund this new state-run bureaucracy and insurance program.  See our letter to legislators on a similar bill that we sent recently.

Cap & Trade (HB 2020) ($1.1B). The newest re-write of HB 2020, the ‘Cap & Trade’ bill, did nothing to alleviate cost concerns for manufacturers or everyday Oregonians. The new version of the bill would immediately add 16 cents per gallon in fuel costs and an immediate 30% increase in natural gas costs for residential, commercial and industrial customers. Large manufacturers will see similar and immediate cost increases for electricity. All told, we are analyzing this bill as a $1.1 billion increase in costs for Oregonians each biennium. The vast majority of direct costs will be borne by manufacturers. HB 2020 will result in an immediate 30% increase in natural gas costs and a 16-cent per gallon gas price hike.

Business Tax Increase ($2B). It’s becoming clearer that leadership will lean toward selecting a Commercial Activity Tax, which is a pure gross receipts tax, as the basis for implementing a new business tax on business to add more than $2 billion in revenue each biennium into the state’s K-12 system. Most models of this tax, start at businesses with $1M or more in receipts (gross revenue), not income.  Those lower would have a flat rate applied.  There is a small direct offset to resident with reduced state income tax rates. At this point, it does not appear that PERS reform or any other government cost savings will accompany this tax proposal.

A growing coalition of business organizations, including OSCC, are now going on record as opposing a new gross receipts tax. Read their letter here

What is the total biennial cost to the all the tax increases that are now on the table? $5.67 billion.

This equates to about $1,417/resident in Oregon and when compared to the total budget of $23.8B, is a 24% increase on the total budget. 

Email me if you are concerned about any of this legislation at debi@tigardchamber.org

Revenue is a Focus in State Capitol for the 2019 Session

Our OSCC lobbyists are at work analyzing the 1,500 bills that have been introduced to date in the state legislature.

Here’s 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 support.

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 month.

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.

As you can see, raising revenue will be one of the dominant themes of the 2019 Session.

We will keep members apprised as the discussions roll out.