Proceed carefully with tax reform
Oregon legislators are to be congratulated for their efforts to create a rainy-day fund and protect the state’s ability to finance important programs from wild swings in the economy. But state leaders should take care to not do the wrong thing for the right reasons. Last week, House Democratic and Republican leaders compromised behind closed doors on a one-year suspension of the state’s corporate income tax kicker to expand the state’s rainy day savings account by $275 million. But at the same time, they also agreed to restructure the state’s corporate minimum to charge businesses based upon their annual revenues, regardless of their net profits. Legislators should carefully wade into these dangerous waters. While we agree that Oregon’s present corporate minimum tax routinely has let some very large companies pay very little in state taxes, tweaks to the system as proposed last week may unfairly hit small privately held businesses that generate high revenues, but low net incomes. We can imagine these would include family-held grocery stores, restaurants and gas stations. Legislators need to take this week to carefully and fully examine the fiscal impacts of the new tax proposal. They must ensure that while trying to expand the state’s inadequate savings account, they don’t unwittingly and unfairly run over the top of certain businesses whose revenues say one thing but whose net profits say another.