Tax Alert #3 – Small Business Tax Increase
After a Session spent seeking a huge new tax scheme that would dramatically increase taxes on larger businesses and burden consumers with higher prices and employees with lower wages, Oregon’s Legislature has shifted to a new plan. Unable to achieve the “supermajority” of votes required to implement a Gross Receipts Tax, similar to Measure 97 which was soundly defeated by voters just last year, Legislators have decided to tax small business instead.
The new plan would hit businesses with fewer than 10 employees with a 41 percent tax increase by bumping the rate they pay from 7 percent to 9.9 percent. This change would give Oregon small businesses among the highest tax rates in the country. Larger corporations would see no tax increase at all, despite their having been the focus of virtually all legislative discussions until this week. For the record, the Taxpayer Association opposes all forms of business tax increases discussed during this Session.
Although the plan very obviously raises revenue, Legislative Democrats are claiming it doesn’t meet the supermajority vote requirements. This would allow it to pass on a simple majority vote in each House, but would also mean it is likely to be tied up in Court for months or years over the supermajority issue. The bill is HB 2061.