March 3, 2009
March 3, 2009
By: John Marshall,
Associated Oregon Industries
Referred to by House Revenue Committee Chair Phil Barnhart (D-Eugene) as the “beginning of the discussion” on increasing Oregon’s $10 corporate minimum tax. This week the committee heard two bills that do just that.
HB 2119, introduced at Governor Kulongoski’s request, imposes a new graduated minimum tax on C-corporations only and bases it on Oregon sales. HB 2070, introduced by the House Interim Revenue Committee, proposes to replace the current $10 corporate minimum tax with a business activity tax.
Under this proposal, a minimum tax would be imposed on C-corporations at a rate of 0.2 percent of the corporation’s “enterprise value tax base,” defined as the total of the corporation’s employee compensation, interest and dividends. Corporations with less than $100,000 in gross receipts would be exempt from this new minimum tax. Under both bills, a C-corporation would pay the greater of its current-law corporate income and excise tax liability or the new minimum tax.
AOI presented the following comments in opposition to both bills:
* AOI supports a modernization of the current $10 corporate minimum that meets the following criteria:
* The change must be simple and not create additional administrative or accounting burdens on the taxpayer.
* The change must only apply to C-corporations.
* The change must base the new minimum on net income, not gross receipts or other measure of “business activity.”
* The change must not encourage or discourage any particular form of business structure; nor advantage or disadvantage one type of business over another.
* The change must not be a substitute for comprehensive tax reform.
* The change must not be used to raise a set amount of money.
AOI stands ready to work with you to craft a reasonable mechanism that modernizes the corporate minimum tax. However, let’s be clear that raising the corporate minimum is a tax increase on businesses that are not making any money – a number that is growing daily.
According to the just-released economic and revenue forecast, “Oregon is projected to lose jobs every quarter in 2009 . . . and the unemployment rate [is] likely to go higher and reach double-digits later this year or early 2010.”
Substantially increasing the tax burden on already-strapped businesses, particularly those with no taxable income, will only serve to stifle the economic recovery needed to get Oregonians back to work and paying the taxes necessary to support critical government programs and services.
Although no further hearings on these bills are currently scheduled, discussions on a variety of revenue-raising proposals will continue as the legislature struggles with balancing the 2009-11 state budget that now faces a $3 billion hole which is expected to get bigger.
AOI is Oregon’s largest and most influential comprehensive business association working to lead Oregon to prosperity. AOI is a non-profit association with five experienced professional lobbyists, more than any other organization in Oregon, and the organization offers its members money-saving services and discounts for their businesses.