On Revenues and Referenda: Will Oregon Require More from Large Businesses?


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Perhaps one of the most debated ballot measures this fall is Oregon’s Measure 97. Multiple economic analyses are circulating, millions of dollars are being spent campaigning, rotary clubs and chambers of commerce are discussing, teachers are canvasing, editorial boards and current and former state governors are weighing in, and polls are fluctuating

Measure 97 would increase the state's corporate minimum tax for businesses with annual Oregon sales over $25 million. Under current law, corporations pay the greater of a minimum tax on sales (ranging from $150 to $100,000) or a tax on profits (6.6 percent on profits up to $1 million and 7.6 percent on profits above $1 million). Measure 97 would eliminate the $100,000 cap on the corporate minimum tax and apply a 2.5 percent rate to sales above $25 million.

If passed, Measure 97 could generate $3 billion in new revenue each year—almost a third of the state’s current budget. The new revenue is earmarked for education, health care, and services for senior citizens, although the legislature would have the authority to appropriate it for other purposes. Gov. Kate Brown, who supports the measure, released a plan earlier this year indicating her priorities for new spending: more vocational and technical education; expanding the state's Earned Income Tax Credit; and reforming business taxes by creating new deductions and closing existing loopholes.

With rising costs currently projected to outpace new revenue, if Measure 97 is defeated, Oregon will face the challenge of cutting $1.35 billion in services from the 2017-2019 budget or raising additional revenue elsewhere.

Proponents argue that the measure would help stabilize the state budget and reduce the risk of budget cuts, thereby allowing for increased investments in education, more accessible health care, and in-home services for seniors. They emphasize that only one quarter of one percent of businesses registered in Oregon would be affected—primarily large and out-of-state corporations not currently paying their fair share (even businesses that don’t turn a profit benefit from infrastructure and state funded services and should contribute accordingly).

Opponents stress the unprecedented size of the tax increase in absolute terms (though the economy of course is bigger today), estimated decreases in private jobs, and the regressive nature of the tax as some portion of the increase is projected to be passed on to consumers and would account for a larger share of incomes among those with low-wages. (Though note that the economic analysis by the Legislative Research Office indicates that the impact of the tax on private job growth is small, as are the changes in incidence.)

If voters can manage to wade through it all, their choice ultimately comes down to questions of values and trust. Do they want to take significant steps towards stabilizing their budget? Do they trust that new revenues would be used to shore up important public investments? Do they believe profitable businesses that benefit from being headquartered in Oregon and having access to markets in the state should be contributing more? Do they believe the prospect of regressive effects or private job dampening are outweighed by the ability to reduce class sizes, access to technical education, and provide greater security for seniors? We look forward to finding out.

For more information on Measure 97, see the Oregon Center for Public Policy’s FAQ blog post.

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