By editorial board • 

For now, the gross receipts tax appears to be only plan in play

The governor and Legislature are battling on two fronts to balance the state budget for the next biennium. On the first, the government has no choice but to curb spending.

The Oregon Constitution requires the state to balance its budget ever two years to prevent the kind of out-of-control debt and spending we see at the federal level. Accordingly, Gov. Kate Brown released a three-point plan last week to help cut a $1.6 billion deficit by pruning expenditures. 

Brown proposed a task force to identify elements that can be privatized or leveraged, impose market-driven compensation for salaries and crack down on  unpaid tax obligations to the general fund, currently running half to three-quarters of a billion.

Many won’t like the resulting cuts to services and grants, but they are essential. A bipartisan letter from the Ways and Means co-chairs said as much, noting, “Without action to contain the growing costs of state government now, the structural imbalance will cause even greater deficits in future years.”

But over the long haul, cuts won’t be enough. Changes to the tax code are needed in order to raise additional funds more efficiently. 

Legislators seem set on a corporate gross receipts tax of 0.25 percent to 1.0 percent. And either would be much easier to swallow than that outlandish 2.5 percent written into last year’s failed Measure 97.

Oregon’s current corporate income tax is abused by large corporations. There are myriad methods they can use to dodge net income numbers and take advantage of tax credits, thus incurring a smaller tax payment than warranted.

A gross receipts tax is much easier to manage on the state side and much more difficult to abuse on the business side. However, research shows corporate activities taxes tend to translate into higher prices for consumers. Ultimately, the company is able to pass on much of the burden.

That’s particularly true of retailers with the capital to produce their own ingredients and create their own products — companies like WinCo, Safeway and Walmart. They enjoy a huge advantage over smaller, locally rooted businesses in passing costs along.

Secondly, a receipts tax can prove devastating for mid-range businesses, which may easily log $5 million to $10 million in sales without finishing the year in the black. They could be tagged with tax bills of $50,000, $100,000 or more despite turning no profit.

Unfortunately, there seem to be few alternatives on the horizon. As Sen. Mark Hass told The Oregonian: “If anyone has a better plan to look at how to reform and modernize corporate taxes, bring it forward.”

For the sake of a healthy and diverse business community, we’d like to see something new emerge. In the meantime, it appears we’re stuck with this one.

Comments

Don Dix

The article states that 'unpaid tax obligations to the general fund, currently running half to three-quarters of a billion'. If accurate, nearly half of the $1.6B deficit is discovered.

So, if the likes of Kotek, Courtney, Kitzhauber, and Brown had not used their majority advantage to enter the state into questionable programs such as Cover Oregon, the Columbia River Crossing, the BETC, (plus others), the remaining deficit would be quite manageable.

Those responsible (legislators) always complain about the lack of money to spend, and yet when there is a stack of unpaid bills inhibiting state business, it's as though no one understands what happened!!

And what is the predictable response? -- attempt another back door run at a sales tax -- every time! M 97 is just the latest example (M66 & M67, etc.).

For 30 years Oregon's government has been devoid of conscience (responsible spending), all the while being the faithful lackey to the public unions thirst for more members and thus a larger, lavish piece of the 'spending pie'. Break the chokehold on Oregon's revenue designations and there will be hope -- until then, the degrading spiral will continue.



Don Dix

Yesterday, May 8, the legislature announced they were considering raising the gas tax. In legislative terms, that means they will. Among its provisions:

•The current 30 cent per gallon state fuel tax would increase by 6 cents next year, and another 2 cents every other year through 2026.
•Both title and registration fees would increase by $20 in 2018, and another $5 every other year through 2026.
•A new vehicle excise tax of 1 percent would begin next year, and would increase by 0.5 percent in 2020 and in 2022. A new bicycle tax of 4 percent would begin next year as well.
•A statewide employee payroll tax of 0.1 percent would take effect next year. It would cost a minimum wage worker about $20 per year, or a worker with an annual salary of about $50,000 about $50 per year.

The measures would bring in an estimated $509.1 million next year, increasing gradually to $1.1 billion in 2027. Do you really believe that?

Here is what the was said in 2010 about a proposed raise to the gas tax --
Proponents of the legislation noted that, though this is a difficult economic time for additional state taxes, the bill pledges an annual $300 million investment to the maintenance of roads and bridges across the state. Lawmakers also expect the legislation to create 40,000 jobs in Oregon over the next 10 years.

How did that 'promise' work out? Just babble and BS. And yet another taxing proposal is being presented. One would think 30 cents for every gallon sold in Oregon would be ample to keep the infrastructure in tact. I guess when money is wasted elsewhere, there's always a chance to recover with additional gas tax.

Your legislature at it's taxing best!

Sal Peralta

Don - In fairness to the 2010 legislature, one of the main things they funded with that tax was the Newberg-Dundee bypass. I question the actual benefit of the bypass in terms of improving time travel to Portland, but there is no question that it is getting completed on the budget and timetable that was promised when they took on that phase of the project. Worth repeating that Yamhill County will see almost no benefit from the new proposed gas tax because all but one of our legislators voted against the 2010 measure, even though our county disproportionately benefited from the tax.

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