Review of business tax bills

Associated Oregon Industries
Oregon’s largest business advocate

The first batch of nearly 1,500 pieces of legislation introduced during the “organizational days” of the 2015 Oregon Legislature produced over 100 tax-related bills that AOI will track for Oregon employers.

Consistent with what AOI has seen the past few Legislative Sessions, the number of bills adversarial to business and economic growth significantly exceeds those that would help the competitiveness of Oregon companies. Of the tax bills introduced thus far, AOI has adopted a position of “oppose” on 29 of them. AOI supports eight bills that have been introduced to date.

Here are some themes that stand out with the early legislation:

1. Key economic development incentives are facing mounting scrutiny and opposition. The Strategic Investment Program (SIP), the Gain Share Program, and Enterprise Zones all are the subject of legislation that would limit or expire these programs.
2. The Oregon Supreme Court’s ruling in Con-Way, Inc. v. Oregon Dept. of Revenue is clearly being targeted for repeal. The Oregon Supreme Court affirmed the Oregon Tax Court in a 2013 ruling that entitles Oregon companies to apply their legal tax credits to satisfy their corporate minimum tax liabilities. Liberal interest groups have now taken to calling this ruling the “Con-Way Tax Loophole.” Three separate pieces of legislation have been introduced to repeal the Court’s decision – HB 2076, HB 2096, and HB 2107. AOI opposes these bills.
3. Corporate tax disclosure bills again introduced. These bills have been the subject of hearings in past Legislative Session but there may be a little more of a push for these bills because anti-business groups want to know exactly which companies are exercising their rights under the Oregon Supreme Court’s Con-Way decision. As introduced, the corporate tax disclosure bills – HB 2077 and HB 2138 – would require even the smallest Oregon companies (down to 25 employees) to publicly disclose their tax information for publication on a state-run website.
4. Initial bills show a preference for limiting deductions over raising tax rates. Only one bill so far, introduced by Governor Kitzhaber, calls for raising tax rates on C corps. Instead, most bills focus on limiting Schedule A tax deductions. The mortgage interest deduction is by far and away garnering the most attention with legislation intended to limit the deduction.
5. There is no shortage of creative ways to raise taxes. One bill, HB 2079, adds executive and employee compensation over a yet-to-be determined threshold as additional taxable income to be taxed by the state. Another bill, HB 2158, increases taxes on taxpayers and businesses should Oregon’s high school graduation rates decline. Finally, HB 2137 imposes a sales tax on all works of art with a sales price exceeding $250,000.

To view any of the above mentioned bills, you may go to the Oregon Legislature website.