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Tax bill will be amended before state House vote next week

Democrats’ plan would eventually replace corporate income taxes with a business activities tax on sales of more than $3 million

By Claire Withycombe

Capital Bureau

Published on June 15, 2017 3:30PM

Last changed on June 15, 2017 6:08PM

Proceeds from a proposed tax on business sales could go to an education-specific fund. Many schools, like Warrenton Grade School, shown here, are struggling with infrastructure problems.

Edward Stratton/The Daily Astorian

Proceeds from a proposed tax on business sales could go to an education-specific fund. Many schools, like Warrenton Grade School, shown here, are struggling with infrastructure problems.

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SALEM — A proposed tax on business sales authored by Democrats is going to be amended over the weekend before it is expected to go to the floor of the state House of Representatives.

Legislators on Thursday went over several amendments to the proposal, which is still taking shape, and is expected in the next iteration to include more specificity on a proposal to direct the tax to an education-specific fund, and to include a proposed exemption on agriculture and forestry businesses.

State Sen. Mark Hass, D-Beaverton, asked staff to draft two versions, one that does — and one that does not — include the exemption for agriculture.

The current draft increases the corporate income tax temporarily and then institutes a tax on businesses with sales of more than $3 million annually. The rate varies depending on sector, and businesses with more than $150,000 but less than $3 million in annual sales would pay a flat rate of $250. The proposal also includes reductions in the personal income tax.

It is projected to raise more than $500 million a year.

The so-called corporate activities tax is a significant piece of legislation this session, part of an effort to reconcile what some lawmakers have described as the state’s volatile tax structure. Lawmakers are scrambling to fill an approximately $1.4 billion gap between expected revenues and expenses in the next two years.

The Joint Committee on Tax Reform is expected to meet again Monday morning. Republicans on the committee Thursday were critical of the tax, which Democrats in the House and Senate have advocated. The bill will need some Republican support in order to meet the legally required vote threshold for raising new revenue.

The current version of the bill dedicates the money collected by the commercial activities tax, minus a pass-through credit, to an education-specific fund.

Sen. Herman Baertschiger, R-Grants Pass, said the proposed structure creates “winners and losers” depending on the business type.

Hass said 92 percent of Oregon businesses have less than $3 million in annual sales.

The committee also plans to hear from the state Department of Revenue next week. The department would be responsible for administering and collecting the new taxes provided for under the legislation. The Department of Revenue has come under criticism from lawmakers this session, including for the fact that the state is owed more than $3 billion in unpaid taxes, fines and fees.

The Capital Bureau is a collaboration between EO Media Group and Pamplin Media Group.



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