Bills Increasing Corporate Minimum Tax Introduced

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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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