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Oregon lawmakers urged to enact transparency to discourage corporate tax avoidance

News Release
January 14, 2021

Citing “ample evidence” that corporations have been using aggressive tactics to avoid paying taxes, a report released today by the Oregon Center for Public Policy (OCPP) urged the Oregon legislature to require large corporations to make public how much they pay in state income taxes and what tax breaks they use.

“The lack of public accountability allows corporate tax avoidance to go unchallenged,” said Daniel Hauser, a policy analyst with the Oregon Center for Public Policy. “Enacting corporate tax transparency is a key step in fixing the problem.”

At a time of healthy corporate profits, the tax on those profits — the corporate income tax — has failed to keep up, according to the Center. Its report said that the share of Oregon income taxes paid by corporations has declined by more than 60 percent since the mid-1970s. It also noted that, from 1980 to 2015, corporate income tax collections in Oregon increased 250 percent in nominal terms, while corporate profits nationally grew 646 percent over the same period.

“The reasons for relatively weak corporate income tax collections at a time when corporate profits have been strong are no great mystery,” said Hauser. “Corporations exploit the many tax loopholes and subsides they have lobbied for and won. They also artificially shift profits to oversees tax havens to avoid paying taxes here, where those profits were earned.”

But while the main strategies of corporate tax avoidance are clear, the specifics are not, said Hauser. Oregon does not require corporations to make public how much they pay in income taxes and what tax breaks they use to reduce their tax liability.

“You know something is wrong with your car when it breaks down, but you can’t fix it unless you look under the hood,” Hauser said. “The same is true for Oregon’s corporate tax system.”

Corporate tax transparency would reveal the specific mechanisms corporations use to shrink their tax bills, the report said, allowing the public and lawmakers to determine whether reforms to the corporate income tax system are needed.

Knowing that they will have to disclose key tax information alone may dissuade corporations from engaging in aggressive tax avoidance, according to the report. “At the very least,” said Hauser, “tax transparency will allow consumers to ‘vote with their dollars’ and decline to do business with corporations they view as failing to uphold the common good.”

"Corporate tax avoidance undermines the well-being of Oregonians,” said Jaime Rodriguez, President of the American Federation of Teachers (AFT)-Oregon. “It means less resources for education, health care, and other public services that benefit all Oregonians. These services strengthen the state’s workforce that corporations count on.”

Corporate tax transparency also will allow the public and lawmakers to better understand what Oregonians get in return for the tax subsidies corporations receive, as well as evaluate claims by corporate lobbyist as to the impact of proposed tax changes on the corporations they represent, the report said.

OCPP collaborated with labor organizations, the faith community, and other groups in developing a proposal for corporate tax transparency, the Corporate Tax Transparency Act.

The Corporate Tax Transparency Act would only apply to corporations that are publicly traded, such as in the New York Stock exchange; that operate in multiple states or countries, not just Oregon; and that take advantage of a tax break or subsidy.

“Corporate tax transparency would increase accountability and fairness in our tax system,” said Hauser. “That’s a win for all Oregonians.”

The Oregon Center for Public Policy (www.ocpp.org) is a non-partisan, non-profit institute that does in-depth research and analysis on budget, tax, and economic issues. The Center’s goal is to improve decision making and generate more opportunities for all Oregonians.