Massive revenue increases underscore impacts of inflation on taxpayers
BY Oregon NFIB,
SALEM, Ore., May 17, 2023— From Anthony Smith, Oregon state director for the National Federation of Independent Business (NFIB), on today’s revenue forecast. Every three months, Oregon’s Office of Economic Analysis provides the State Legislature with an update on projected tax revenues.
“When projected revenues were up nearly $700 million back in February, NFIB urged the Legislature to take action on opportunities to provide tax relief to small businesses.
“Now, state economists have modified their forecast methodology to account for inflationary impacts, resulting in more than $1.8 billion in combined net resources – that’s $2.5 billion in new money that wasn’t available to lawmakers just six months ago.
“Now is the time act on estate tax and CAT relief – and the conversation shouldn’t be ‘if’ we help our small businesses retain and reinvest more of the money they earn, but ‘how much.”
NFIB supports raising the Corporate Activity Tax (CAT) filing and exemption threshold to reduce the economic impacts of the state’s gross receipts tax, which businesses with sales in Oregon of $1 million or more are required to pay whether they make a profit or not. Public hearings have already been held on HB 2433 and SB 127.
NFIB also supports reforming Oregon’s estate tax by increasing its lowest-in-the-nation exemption threshold of $1 million. As a comparison, the federal estate tax exemption threshold is $12.92 million for 2023. Public hearings have already been held on SB 68, SB 456, SB 498, SB 939, and HB 2624.
From the Oregon Office of Economic Analysis
“One major factor has been the current inflationary environment. The vast majority of Oregon’s taxes are not adjusted to inflation and rise along with prices. With demand outstripping supply, businesses and consumers are paying premiums for their needs. This has translated into a wide range of taxable business and labor income, which has moved many filers into higher tax brackets. The new Corporate Activity Tax, Vehicle Privilege Tax, alcohol, and tobacco taxes have risen with inflation as well.
“Inflationary dynamics have not been captured well by Oregon’s revenue models, given that this sort of environment has not existed since years before computerized models have. Oregon’s revenue models have also been refined to better account for fixed tax brackets and federal tax reform.”
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