- Associated Press - Friday, April 28, 2017

PORTLAND, Ore. (AP) - Oregon lawmakers next week will unveil a corporate tax overhaul akin to Measure 97 - the multi-billion-dollar tax hike proposal on big business that voters rejected in November - that may include new levies for almost all businesses and a scaled-back tax burden on low-income households.

With hiring freezes and other cost-cutting proposals now on the table to address the upcoming $1.6 billion budget shortfall, lawmakers are drafting the corporate tax-overhaul as a way to pump more revenue into state coffers. Their proposal would replace Oregon’s corporate income tax, among the nation’s lowest, with a Measure 97-like tax on businesses’ gross receipts, or revenues from business-to-business transactions for things like equipment and materials, beginning in 2018.

But what’s different about this plan is that it includes strategies to offset the “impact of higher consumer prices” by reducing personal income tax rates, among the nation’s highest and the state’s largest source of revenue, for low-wage Oregonian households. Personal income tax credits may also be expanded and standard deductions could go up, although the specifics are still unclear, according to a draft overview of the plan obtained by the Associated Press.

The proposal’s still-undetermined tax rate would be lower than what was proposed in Measure 97, and it would apply to nearly all businesses, not just the largest or certain types, according to the draft document.

Distribution centers, donations to nonprofits as well as transactions with government or among “closely related business entities” would be exempted from the tax, while tax credits would be available for pass-through entities, which are often defined as sole proprietorships.

The proposal’s framework is being presented Tuesday morning in Salem by Paul Warner, the Legislature’s chief tax analyst and revenue guru, during the first hearing for the Joint Tax Reform Committee. That temporary panel was formed this past week with the 14 total members of the House and Senate revenue committees. A second hearing has also been scheduled for Thursday.

Warner declined to discuss the framework document ahead of the Tuesday meeting, saying more changes could be made.

But Republican leaders in both chambers are adamant that the minority party won’t support a gross receipt tax, and Jonathan Lockwood, spokesman for the Senate Republican caucus, says “voters spoke loud and clear when they defeated Measure 97.”

Some businesses are already opposed as well, and John Davis, a former state lawmaker, is rallying the public to attend next week’s meeting.

“Those companies that can still afford to stay in business will have no choice but to raise their prices, and that will hit low and middle-income families and seniors living on fixed incomes really hard,” Davis, who is now a spokesman for the business-backed Priority Oregon campaign, said in a statement Friday. “We need to remind members of the committee that they’re taxing real people and small businesses, not just big corporations.”

Republican support is key considering a tax-hike such as this requires a three-fifths majority vote before it could go to Gov. Kate Brown for signing into law.

However, the proposal may instead go to voters for final approval, according to Democratic Sen. Mark Hass, who is chairing the new Tax Reform Committee - a move that would require only a simple majority vote by the Legislature. That could leave the door open for a similar showdown between businesses and labor unions that ensued last year over Measure 97, and both groups have already signaled a willingness to do so again.


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