Oregon Voters Reject Big Business Tax Proposal

Published November 17, 2016

Oregon voters rejected a proposed tax hike on businesses, the Oregon Business Tax Increase Initiative, in the November elections.

The proposal, titled Measure 97 on the ballot, would have created a modified gross-receipts tax by removing caps on the state’s minimum tax on business profits. The ballot question proposed increasing business owners’ tax burdens by changing tax rules for “C-corps,” businesses or corporations taxed separately from their owners.

Businesses’ minimum tax burdens are currently capped at $100,000, but the question proposed removing the cap. Businesses selling more than $25 million in goods or services would have paid a 2.5 percent tax on all sales exceeding $25 million, plus a $30,000 minimum tax.

‘Unfair and Crushing’ Tax

Jason Williams, executive director of the Oregon Taxpayers Foundation, says voters were unenthused about another tax increase.

“The tax was grossly unfair and crushing in its impact upon businesses and consumers,” Williams said. “Families were staring at a $1,200 tax impact from higher prices and costs from this bill. Once people saw the price tag of this tax, they soon deserted any support.”

Beware the ‘Son of 97’  

Williams says the defeat of the tax-hike beast is only temporary.

“On election night, the measure’s author said the defeat was due to not getting ‘the details right’ and pledged to be back during the 2017 legislative session with a stronger effort and a new tax,” said Williams. “Sure enough, taxpayers should expect the ‘Son of 97’ to appear in a few weeks, when 2017 begins.”

Consumers Are Also Taxpayers

Steve Buckstein, founder and senior policy analyst at the Cascade Policy Institute, says all Oregon consumers would have been paying the bill if the measure had passed.

“It only taxed C-corps with over $25 million in revenue in Oregon,” Buckstein said. “They would pay the checks, but every business in the state and every consumer in Oregon would pay the bill, in effect. It would pyramid, as economists call it, through the economy. So, 2.5 percent could end up causing a 3, 4, or 5 percent increase in retail prices. The power companies said it would increase our utility bills 3 to 4 percent.”

Buckstein says voters’ rejection of Measure 97 may make special-interest groups in other states think twice about demanding tax hikes.

“I’m sure public-employee unions all over the country were watching this fight,” Buckstein said. “If it passed in Oregon, they were likely going to try something similar in other states. Hopefully, this set back that effort in other states.”