Oregon could be in line for a one-time windfall of $140 million in additional corporate taxes.
The state Senate on Tuesday unanimously approved a bill aimed at capturing additional tax money from profits kept overseas by corporations that do business in Oregon.
Senators from both parties suggested the money could be used to help trim the state’s multibillion-dollar deficit in the Oregon Public Employees Retirement System.
The money — if it materializes — could help Gov. Kate Brown in her efforts to provide financial incentives to public agencies if they agree to move more quickly to pay down their PERS debt.
This bill “is on the governor’s radar screen,” said Chris Pair, Brown’s communications director, adding that she supports using the potential new revenue for her proposed incentive fund.
The additional corporate taxes could come as the result of the sweeping new federal tax law approved by Congress late last year.
It included a repatriation tax on corporate profits held in foreign countries. The Legislature’s tax experts say that through a quirk in state law, those federal provisions could actually lower some corporate taxes in Oregon.
“That creates a counter-intuitive revenue loss of more than $100 million if we do nothing,” Senate Finance Chairman Mark Hass, D-Beaverton, told his colleagues.
Hass said he and other legislative officials talked with corporate officials and found no opposition to changing state law to pick up some taxes on the overseas profits.
As the bill is worded now, the Legislative Revenue Office estimates it could generate $140 million in the current budget cycle.
Sen. Brian Boquist, the top Republican on the finance committee, called the estimate “overly highly speculative” and said the state really doesn’t know how much it might collect from major corporations like Nike.
In any case, Boquist added, several corporate officials thought the state was wrong in how they were interpreting the new federal law and that “they thought they were supposed to pay.”
The bill now calls for any revenue from the repatriation tax to go into savings. Republicans moved to have the bill changed so the money would go toward paying down the PERS debt.
But Democrats defeated that move. Hass said he likes the idea of using the money for PERS. But he said the bill could be amended later, once the Legislature has acted on the governor’s plan to set up an incentive fund on PERS. The retirement system now has a deficit officially pegged at about $25 billion, but experts say last year’s strong stock market helped cut it by around $3 billion.
The Senate put off action on another bill dealing with the fallout from the federal tax law. Among other things, that measure would greatly reduce the size of tax breaks for many business owners who pay personal income taxes on their profits.
That’s faced strong business opposition, and Democrats were concerned about having enough votes to pass it because one of their members, Sen. Chuck Riley of Hillsboro, was absent Tuesday because of illness.