Two ballot measure collected enough signatures to make it to Oregon’s November ballot. One is not so bad, but the other one is very, very bad and will make Oregon’s business reputation even uglier than it is now. Let’s take a look.
Measure 118
Measure 118 “Increases highest corporate minimum taxes; distributes revenue to eligible individuals; state replaces reduced federal benefits.”
Measure 118 is both bad and ugly. The measure promises an “Oregon Rebate” of $750 per resident paid for by increasing the corporate minimum tax to 3% of corporate sales. I underlined, bolded and italicized that so you cannot miss it. Not 3% of taxable income but 3% of corporate sales above $25,000,000.
This is not a value-added-tax (VAT) but rather a 3% “sales” tax on each stage of production. Let’s look at how this might impact the cost of 2×4’s used to build a new home.
- Logging company cuts down a tree and sells it to a lumber mill. Add 3%.
- Lumber mill turns the trees into 2×4’s and sells it to a distributor. Add 3%.
- Lumber distributor sells it to a local local retailer. Add 3%.
- Local retailer sells the 2×4’s to a home builder. Add 3%.
- Home builder uses the 2×4’s to build a home and sell it to a family. Add 3%.
This example assumes all companies involved have sales of $25 million. The 3% is paid on sales on each stage of production and distribution.
$25 million sounds like a lot but that’s only 50 homes sold for $500,000. Unlike a sales tax, the 3% is paid with the corporate tax return and not paid by the retailer only.
A company which sells a product for a $100 with a 10% profit margin would have $10 profit per sale. 3% of the $100 sales price would be a $3 tax under Measure 118. This $3 tax would equal 30% of the $10 profit. That’s highway robbery.
This Ballot Measure is so bad even Gov. Tina Kotek opposes it.
Kotek Pans Initiative Petition 17, Which Would Raise Corporate Taxes
The governor says the proposal to write nearly every Oregonian a $750 check would “punch a huge hole in the state budget.”
Corporations have a different concern: They already pay taxes on profits and gross receipts (effectively, sales attributable to Oregon), making Oregon one of only two states that impose both kinds of taxes on companies (Delaware is the other).
Rep. Ed Diehl was glad to hear of Gov. Kotek’s opposition. He posted this on Twitter in response:
“Great news. IP-17 would be the single largest tax increase in the history of our state, around $6.8 Billion. It’s a tax on corporate sales, not on profits. It’ll hit corporations hard and put them at an unfair disadvantage. It’ll also increase the cost of all the goods you buy. And by its design, it will reduce the state’s general fund revenue by billions of dollars, money that would otherwise go to schools, public safety, and infrastructure. The backers of IP17 are Californians and New Yorkers – about 98% of the petition’s funding is coming from those two states. They are trying to run yet another social experiment in Oregon. Don’t let them get away with it. Oregon has learned its lesson from the failed Measure 110. We are no longer the lab rats for every crazy leftist idea. IP-17 will be on the ballot in November (a ballot measure number has not been assigned yet.) Vote NO.”
Here’s the state’s analysis of this convoluted, insidious, and economically devasting measure:
https://sos.oregon.gov/elections/Documents/fec/IP17-Updated-Analysis-7-25%20meeting.pdf
Measure 119
Under Measure 119, “Cannabis retailers/processors must remain neutral regarding communications to their employees from labor organizations; penalties.”
That’s the official description. This measure would make it easier to unionize cannabis retailers and processors by restricting the free speech rights of cannabis business owners. s
I’m not a big fan of cannabis operators. I am a big fan of the First Amendment. I’ll be voting “No” on this measure.
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