Bills Increasing Corporate Minimum Tax Introduced

By John Marshall
Associated Oregon Industries
Oregon’s largest business association

Even though the 2009 Legislative Session convened less than two weeks ago, already two bills proposing to increase the $10 corporate minimum tax have been introduced.   HB 2119, introduced at Governor Kulongoski’s request, imposes the new minimum tax on C-corporations only and bases it on Oregon sales.  The new minimum is bracketed as follows:

Although the bill directs the proceeds of the higher corporate minimum tax to the state’s Rainy Day Fund, the governor declared in his state-of-the-state address that he now wants the proceeds – estimated at close to $85 million – to fund college scholarships.

HB 2070, introduced by the House Interim Revenue Committee, proposes to replace the current $10 corporate minimum tax with a New Hampshire-style 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’s board-adopted policy position supports an increase in the corporate minimum tax from $10 to $300, but does not support a tax increase on business as substantial as either proposed by HB 2070 or HB 2119.  AOI will therefore oppose both bills.

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