Is Oregon Business Friendly?

Many factors go into determining if a state is business friendly. A recent national report concludes that Oregon has the nation’s second-lowest effective business tax rate for new investments. Some commentators are jumping all over this, as if it more than offsets all the negative factors for businesses, such as the passage last year of Measures 66 and 67.

But, the report actually has only limited good news, and then only for investments in Oregon by profitable corporations that are already here. It fails to consider other factors that don’t make Oregon look nearly as good. For example:

First, it doesn’t even consider the fact that unprofitable corporations can be hit by the gross receipts tax of Measure 67.

Second, it doesn’t consider the impact of Oregon’s high personal income tax rates on the decision of corporate managers about whether they want to move here. Under Measure 66, Oregon has the highest personal income tax rate in the nation at 11 percent, not a strong selling point to move here from somewhere else.

Third, the report says nothing about Oregon having the highest personal capital gains tax rate right now, again at 11 percent.

Add such factors as the open-ended Business Income Tax in Portland and Multnomah County, and there are plenty of reasons for Oregon to be considered less than an attractive state to do business in.

A low effective tax rate for investment in Oregon by profitable corporations that are already here is great. If only it wasn’t offset by high tax rates on everything else.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.