By editorial board • 

Report: Proposed corporate sales tax would act largely as consumption tax

An analysis released this week confirms what many Oregonians have suspected from the outset: Initiative Petition 28 is bad for our state and bad for our pocketbooks. It has little if any upside. Just making the ballot, the measure puts us in a lose-lose situation.

The sponsoring coalition, consisting largely of public employee unions, is proposing a historically large tax increase on companies doing business here — probably the largest ever imposed. Signatures were submitted last week to qualify IP 28 for the November ballot.

Under IP 28, a tax of 2.5 percent would be imposed on all sales over $25 million, in addition to the corporate minimum tax on the first $25 million. A corporation with $50 million in sales would incur a minimum tax of $655,001.

The report from the nonpartisan Legislative Revenue Office exposes the measure for what it is — a consumption tax that would ultimately be passed on to consumers.

The office estimates people with incomes of $21,000 or less would pay $372 more in indirect state taxes. Those making between $48,000 and $68,000 would pay $613 more, those with incomes between $103,000 and $137,000 would pay $751 more, and those with incomes over $206,000 a year would pay $1,282 more.

A Better Oregon, the union-led nonprofit behind the measure, claims it’s a case of out-of-state corporations paying their fair share. It claims the gusher of new revenue would boost education and health care services.

But we see it as a money-making scheme to address the ongoing Public Employee Retirement System shortfall. In essence, the public unions are seeking a bailout from corporations and consumers.

Because it functions as a gross receipts tax, not taking into account profit and loss, companies operating on smaller margins would be forced to raise prices. The best example would be grocery stores.

“Taxes initially born by the retail trade, wholesale trade and utility sectors are expected to result in higher prices for Oregon residents,” the report concludes.

Furthermore, it concludes that just 50 of the 1,051 firms subject to the tax would take more than half of the hit. Being taxed millions of additional dollars to bail out PERS is a sound reason for CEOs to look elsewhere to establish business and provide jobs.

Some are predicting it will trigger the most expensive political fight in Oregon’s history, as business and labor interests battle public union rhetoric. It will thus mean more division and less constructive compromise as Oregon seeks solutions for the future.


Don Dix

Remember this next fall -- for over 30 years the Ds have 'operated' the state's business, and the public employee unions have laid out the processes and desired results for the Ds to accomplish.

Simply yank the chain and the Ds will trample each other to be 'submissive and obedient' -- with a guarantee to be 'reelected' to further insure another session of public union largess and greed -- pathetically accurate example of Oregon's representative government, yes?

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