Revised February 23, 2004
Time to Raise the Corporate Minimum Tax: Top execs get pay raises while Oregon gets just $10
by Michael Leachman
Oregon's minimum corporate income tax is just $10. This minimum tax has not changed since being lowered in 1931.
Companies paying the minimum tax claim no income tax liability, but that does not mean that these companies are failing. Many companies that are profitable pay the minimum tax.
- In 2002, Portland General Electric (PGE) and Louisiana Pacific both paid the minimum amount in state corporate income taxes - $10. That same year both companies also gave their CEOs substantial pay raises. PGE increased CEO Peggy Fowler's total compensation by $211,000 to $979,000 in 2002. Louisiana Pacific increased CEO Mark Suwyn's compensation by $422,000 from $1.5 million to $1.9 million in 2002.
- Since 1931, Oregon's minimum corporate income tax has held steady at $10 while inflation and economic growth have driven up corporate revenues. The ten dollars PGE paid in Oregon income taxes in 2002 equaled just 0.0000005% of the company's operating revenues that year.
- In 2000, more than half of all Oregon corporations with known payrolls over $2 million paid Oregon just $10 in income taxes.
- Twenty percent of corporations paying the minimum $10 income tax in 2000 used losses carried forward from previous years to reduce their taxes to the minimum. In 2000, corporations in Oregon deducted $1.1 billion in previous year losses from their 2000 incomes.
- Some large corporations made heavy use of tax credits. Twenty-six corporations with Oregon taxable income over $1 million ended up paying the minimum tax in 2000.
- Businesses which elect to be S-corporations, rather than as C-corporations, avoid paying federal corporate income taxes while still enjoying the privileges of being a corporation, including access to corporate tax credits and personal liability protection. A modest increase in the minimum corporate income tax for these firms will not cause them to convert from S-corporation to C-corporation status.
- In 2000, 316 S-corporations reported more than $1 million in Oregon taxable income. Five S-corporations reported Oregon taxable income of more than $25 million. All S-corporations pay the $10 minimum tax.
