Oregon House Democrats pitched a plan to overhaul the way the state taxes businesses Thursday. The proposal is part of an effort to bridge a $1.6 billion shortfall in the upcoming budget, but Democrats say their efforts would benefit the state for years to come.
Under the proposal, most Oregon businesses would pay a flat tax of $250 per year. Those with Oregon sales that top $5 million a year would pay a 0.95 percent tax on sales. The new tax would replace the existing corporate income tax, which is based on a company's profitability.
Eugene Rep. Nancy Nathanson is the chief budget writer for House Democrats. She says the goal is to do more than simply patch up the short-term spending plan. "Instead of ending up with something mediocre, is there something new we can do and make a significant new investment in education that will actually move the dial," said Nathanson at a meeting of the Joint Committee on Tax Reform.
Nathanson says the proposal would raise $2.1 billion for the upcoming budget cycle. Its fate is unclear, as it would need some Republican support to be approved. Rep. Cliff Bentz, R-Ontario, said the proposal bears similarity to Measure 97, which Oregon voters rejected last November. "What is it that suddenly has changed?" said Bentz, who serves on the committee that heard the proposal. "Most people are still going to see this as a sales tax and they're going to be unhappy with it," he said.
The plan put forward by the House Democrats differs somewhat from Measure 97. That initiative, which was backed by public employee unions, only taxed certain types of businesses, and only those with Oregon sales above $25 million per year. It also maintained the existing corporate income tax. The new proposal would also reduce personal state income taxes for some low and middle-income households, in an attempt to offset possible increases in consumer prices at businesses that would pay more in taxes under the plan.
Any tax increase would require at least some Republican support, since Democrats don't have enough votes to pass revenue-raising measures on their own. The plan that House Democrats pitched Thursday will likely be subject to weeks of negotiations and further changes. Sen. Mark Hass of Beaverton is the Democrats' point person for revenue issues in the Senate. He said he thinks the new plan is "a good idea" but the final plan will be the result of additional "collaboration and consensus."
If lawmakers do agree on raising additional revenue, it will likely be paired with cost-cutting measures. Lawmakers released a basic outline of cost containment proposals last month.