Appeal Tribune Wednesday, August 2, 2017 3B
Do Oregon businesses pay
their fair share of taxes?
DIANE DIETZ
STATESMAN JOURNAL
The central question in Oregon poli-
tics right now -- and at least for the year
to come -- is do businesses pay their
share of taxes?
Republicans say “heck yes.” Demo-
crats say “heck no.”
Last fall, the argument produced the
single most expensive battle-of-the-bal-
lot-box in Oregon history in the form of
the Measure 97 business tax increase.
Oregonian voters rejected it, but the
debate carried over into the Oregon Leg-
islature this spring in a proposed gross
receipts tax, which failed -- and now a
petition drive is under way to bring the
question back to the ballot in November
2018.
Oregon voters, it seems, cannot es-
cape the question: do businesses pay
their fair share of taxes?
Democrats tend to point to the $500
million to $700 million a year in income
tax that corporations pay, which is a
small sum compared with the $7 billion
that Oregon households pay in personal
income tax each year. Case closed? Not
so fast.
Businesses pay quite a bit more in tax-
es, according to the Legislative Revenue
Office and the Council on State Taxation
(COST) -- both of which produce reliable
numbers that are largely unencumbered
by political spin.
Businesses also pay property tax, for
example. It’s the largest single tax that
businesses pay nationally and in Oregon,
the COST data shows. About 36 percent
of the taxes that a business pays is in the
form of property tax. In Oregon, voters
put a lid on how much property taxes can
increase in the 1990s with Measure 5 and
Measure 50. Consequently, property tax-
es in Oregon are unremarkable com-
pared with other states and the nation as
a whole.
The corporate income tax, mean-
while, has bumped along at the bottom of
the tax charts. That’s because fewer cor-
porations are paying taxes in Oregon as
time goes by. In 1990 35,510 corporations
filed state tax returns. By 2014, the num-
ber had dropped to 29,376, a slide of 17
percent. What does that mean? Are cor-
porations fleeing a tax-happy state?
No.
Over the past 25 years, corporations
nationally have shape shifted into a dif-
ferent business form to avoid paying the
35 percent federal corporate income tax
rate. They became S-corps and Limited
Liability Companies (LLCs).
The Internal Revenue Service allows
S-corps and LLCs to pass their profits on
to their members or shareholders --
where they can pay taxes on the business
income at the lower personal rate. In ad-
dition, the S-corp form allows the busi-
ness owners a great deal of flexibility
about whether to pay the business own-
ers wages -- which might be liable for
employment taxes -- or to keep the mon-
ey as business income, whichever is the
most advantageous.
In Oregon, S-corps grew from 18,437
in 1990 to 61,427 in 2014 -- an increase of
233 percent. The state even gives pass-
through taxpayers a sliding scale break
on state taxes equal overall to about a 25
percent reduction in pass-through tax
collections.
So, basing an argument on on the low
corporate income tax without including
the pass-through taxes that business
owners pay gives a false picture. Most
years, Oregon collections of pass-
through taxes are equal to the revenue
the state gets from regular corporations.
Some years, the pass-through revenue is
greater. This allows Republicans to con-
clude that businesses in Oregon are pay-
ing their fair share.
Should you?
The picture, again, is not so simple.
Oregon businesses still pay significantly
less than their counterparts in other
states. For all states, business taxes com-
prise 44 percent of all taxes, while in
Oregon the figure is 37.2 percent, COST
data shows.
Oregon ranks second from the bottom
of the 50-state pack with business taxes
as a share of gross state product of 3.6
percent. Connecticut is 3.5 percent.
Oregon also ranks near the bottom for
business tax per employee at $4,300,
compared to $3,800 in Missouri, $4,000 in
Michigan and Vermont, $4,100 million in
Indiana and North Carolina and $4,300 in
Georgia. The U.S. average is $5,800, ac-
cording to COST.
That’s largely because Oregon busi-
nesses pay no sales tax, unlike their
counterparts in 45 other states. In those
states, 42 percent of the sales tax reve-
nue comes from business-to-business
sales, such as an attorney’s office buying
paper from Staples, according to the
COST data.
Oregon makes up some of the gap
with a higher-than-average income tax
rate. The state’s per capita income tax
collections are the sixth highest in the
nation at $1,814, according to the Tax
Foundation, a nonprofit think tank.
Similarly, Oregonians pay more in
government fees than in all but six
states, U.S. Census figures show. Since
the 1990s, Oregon has slowly become
more of a pay-to-play state. But the big-
gest share of the fee revenue comes
from tuition paid at the state’s seven uni-
versities and 17 community colleges, al-
though businesses -- particularly in for-
estry, agriculture, parks and recreation
-- pay out-of-pocket for many state ser-
vices.
The heightened collections, however,
do not bring Oregon businesses up to av-
erage compared with other states. Legis-
lative Revenue Officer Paul Warner esti-
mates it would take a 3 percent to 5 per-
cent sales tax to bring Oregon business-
es in line with other states. The gross
receipts tax under consideration in the
last legislative session would have
brought Oregon closer to average.
Would that be fair?
“There is some reality, but there’s also
perspective,” Warner said.
From the Democrat’s perspective, if
businesses paid as much as the national
average, the state could make some sore-
ly needed improvements in schools. Half
of Oregon’s third graders lag in reading
and writing. One quarter of Oregon high
school students drop out. Schools say
they need more money to do better.
The gross receipts business tax
mulled by the Legislature would have
been explicitly dedicated to the schools.
From the Republican perspective,
businesses are saddled with plenty of
taxes in Oregon and adding more would
hamper their ability to compete. The Tax
Foundation’s 2017 business tax climate
index placed Oregon among the 10 most
competitive states in the nation because
of the lack of a sales tax and lower busi-
ness property taxes.
But Oregon’s businesses have a stake
in how good schools are. They need em-
ployees who can read, write, code and
think through difficult problems. COST
tries to quantify the benefit businesses
get compared with the taxes businesses
pay, including the roads, policing and
education they use.
The study found Oregon is one of a
handful of states where businesses gets
more than they pay for -- $1 of benefit for
every 80 cents of taxes businesses pay.
ddietz@statesmanjournal.com, 503-
399-6615 or follow at twitter.com/
diane_dietz.
Universities rent dorms for eclipse; some openings left
tality and not hosting guests in its dorms.
Here are some lodging opportunities
to look into.
NATALIE PATE
STATESMAN JOURNAL
Still looking for a place to stay for the
2017 solar eclipse? University dorms
may be the answer.
An estimated one million visitors are
expected to travel to the eclipse’s path of
totality, which passes over several Ore-
gon cities including Lincoln City, Salem
and Madras on Aug. 21.
Some universities, including Western
Oregon, Oregon State and Eastern Ore-
gon, are renting dorm rooms or camping
spots for the big event and still have
spaces available. But act fast — these of-
fers won’t be around long.
In Salem, Willamette University, Cor-
ban University and Chemeketa Commu-
nity College will host viewings and a va-
riety of events for the eclipse, but will
not be renting out dorm rooms. The Uni-
versity of Oregon is not in the path of to-
Western Oregon University
City: Monmouth
Cost: $150-190* for camping spaces.
Package: Rates are per room, two-
night minimum (Saturday, Aug. 19 &
Sunday, Aug. 20). Guests will have ac-
cess to showers and restrooms.
Spaces available (as of July 26): Sold
out, but a few camping spaces are still
available that can be reserved online.
Contact: Call 503-838-8658, email
conferences@wou.edu or register online
at www.wou.edu/eclipse/lodging/.
Package: Lodging for Saturday (Aug.
19) and Sunday (Aug. 20), with the option
to add Friday (Aug. 18) and/or Monday
(Aug. 21). Package includes wireless in-
ternet, breakfast and dinner in the din-
ing halls and access to university facil-
ities like the gym.
Spaces available: Family lodging is
sold out, but there are 18 single-person
rooms and 15 two-person rooms left for
individuals, excluding minors, as of July
26.
Contact: Call 541-737-9300, email
conferences@oregonstate.eduor go on-
line
to
blogs.oregonstate.edu/eclipselodging/.
Eastern Oregon University
City: La Grande
Cost: $500. The cost is paid in full at
the time of reservation and is not refund-
able.
Oregon State University
City: Corvallis
Cost: $265-562.50
Package: The cost includes the rental
from Aug. 19 through Aug. 22. The rooms
hold up to five people and include kitch-
enettes with a full refrigerator and mi-
crowave, a full bathroom and common
room.
Spaces available: The university is
accepting forms to fill its 60 available
units. More than 80 have been submitted,
but anyone else can submit a form to be
added to the waitlist and may receive a
spot.
Contact: Call 541-962-3575, email
schedule@eou.edu or go online to
www.eou.edu/events/solar-eclipse-
lodging/.
Contact
Natalie
Pate
at
npate@StatesmanJournal.com, 503-399-
6745, or follow her on Twitter
@Nataliempate or on Facebook at
www.Facebook.com/nataliepate
journalist
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