Taxation group praises Oregon's 'effective business tax'

An Ernst & Young study, conducted for the Council on State Taxation, reports that Oregon’s business tax structure ranks better than all but one state in terms of low rates.

The study found that Oregon has the nation’s second-lowest “effective business tax rate” for new investments. Only Maine has what the council called a more “competitive” tax structure.

The taxation group’s study compared state and local business taxes incurred by corporations investing in new facilities or expanding their current structures. The analysis takes into account the state tax structures in place in 2009 and changes scheduled to become law through 2014.

Oregon’s 3.8 percent rate ranked behind Maine’s 3 percent rate and ahead of the 4.4 percent rate levied in Ohio.

New Mexico and the District of Columbia tied for the worst “effective business tax rates,” at 16.6 percent.

The study’s authors noted that:

• Oregon uses a single sales factor corporate income apportionment formula. As a result, the state’s “hypothetical investment in a new facility will have a very small impact on the amount of corporate income subject to tax in Oregon due to sales outside of Oregon,” the council reported.
• The state’s lack of a sales tax is a “significant benefit.”
• Oregon’s tangible personal property tax of 2.11 percent is higher than the 1.65 percent nationwide. However, the state’s real property tax comes out to 1.07 percent, compared to 1.97 percent nationwide.
• Oregon imposes no franchise tax, which can add up because it’s based on the taxpayer’s net worth.

The Oregon Center for Public Policy, the Silverton-based research group that touted the study Wednesday afternoon, maintains the study proves the state shouldn’t reduce business tax rates or increase corporate tax subsidies.

“Oregon business taxes are already low, and the loss of revenue would only harm Oregonians and the state’s business climate,” said Chuck Sheketoff, the group’s executive director.

Sheketoff also maintains the study proves the state shouldn’t tinker with 2010’s Measure 67, which raised Oregon’s minimum corporate tax rate. Some legislators have proposed the measure be repealed or weakened.

About 600 corporations take part in the Council of State Taxation, including Nike Inc., Intel Corp. and U.S. Bank.

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