Business Group Says Oregon Business Taxes Are Second Lowest Among All States and District of Columbia

Oregon could raise business taxes by $1.6 billion and still be in line with nation

(SILVERTON, Ore.) - A new study funded by big corporations found that Oregon has the second lowest state and local business taxes among all states and the District of Columbia and that businesses get a better deal for the taxes they pay in Oregon than just about anywhere else in the country.

The study's data suggest that Oregon's state and local business taxes are so low that the state could raise business taxes by $1.6 billion annually and still be in line with state and local business taxes nationwide, according to OCPP executive director Charles Sheketoff.

In the study, Oregon tied with Connecticut for the second lowest business taxes -- state and local taxes combined -- as a share of the state economy among all states and the District of Columbia. Only North Carolina has lower business taxes than Oregon, according to the study.

The accounting firm Ernst & Young conducted the study on behalf of the Council On State Taxation (COST), an association of over 600 multistate and international corporations that lobbies on state tax policy. COST does not disclose its membership list, so it is not known which multistate or multinational businesses operating in Oregon are members of COST.

"The big business lobby says that Oregon is one of the cheapest states in the nation when it comes to taxes," said Sheketoff.

Sheketoff said the study finds that businesses in Oregon pay state and local taxes totaling 3.7 percent of the private economy, compared to 4.9 percent for businesses nationwide. "Using COST's figures, we've calculated that Oregon could increase business taxes by $1.6 billion annually and we'd just reach the level of state and local taxes being paid by businesses nationally," he said.

The COST study also claimed that Oregon's ratio of business taxes to public expenditures directly benefiting business tied with Virginia's for the second lowest in the nation. Only Nevada got more business services for their business tax buck than Oregon.

"Oregon businesses are getting a heck of a deal compared to their counterparts in all but one other state, if this study published by big business is to be believed," said Sheketoff.

The public policy research center noted that although COST is the nation's largest state tax lobby on behalf of multistate and multinational corporations, COST does not show up as a registered lobbyist in the Oregon Government Ethics Commission's records. "COST apparently doesn't bother lobbying in Oregon to bring down taxes for businesses, because by its own estimation, the state is already at the bottom," Sheketoff commented.

Sheketoff cautioned that the COST study has methodological flaws that skew the numbers, painting a picture that states have high taxes and that businesses get little for the money. He said that the study inflated the share of taxes paid by businesses by including taxes that businesses may pass on to consumers and workers but excluded a great deal of public spending that benefits business. Sheketoff cited the example of the study counting all unemployment insurance taxes as business taxes but not counting any benefit to business from the payment of unemployment insurance benefits.

"Even though they designed the study to paint states as having high taxes and few services that benefit businesses, Oregon came out as tied for having the second lowest business taxes in the nation and for getting the second greatest bang for their business tax buck," he added.

The study's definition of public expenditures that benefit businesses also erroneously excluded most spending on education, as well as all spending on child care subsidies, Medicaid and housing and community development, according to Sheketoff. The study's definition of taxes paid by businesses included an estimate of the personal income taxes that business owners pay when they use "pass-through entities" like limited liability companies and partnerships.

"They used a broad definition of business taxes and Oregon still came out tied for second lowest business taxes among the 50 states and the District of Columbia," said Sheketoff.

The Oregon Center for Public Policy is a non-partisan research 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.

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Jeremy March 5, 2009 1:19 pm (Pacific time)

Friedman also made a comment that businesses were about creating profit, and that eveything flowed from profit. Without profit you do not exist as a business entity. If there is no profit, there is no civilization, only anarchy and/or oppressive forces. The government's current massive intrusion into private business is causing great harm to our markets, and cognitive scientists's are not needed to measure that reality. It won't be much longer that even the most optimistic voters will realize that the change we are experiencing is not the change Obama alluded to during his campaign for office.

Henry Ruark March 5, 2009 10:51 am (Pacific time)

Beatrice et al: Cognitive scientists and others dealing with human behavior have now shown very clearly that dependence on points made re tax changes in threatening depression no longer reflect realities of behaviors involved. Those were part of "trickle down" economic theory, which in itself never worked for the very reasons now clearly proven by this later research. This is 21st Century, the basic findings involved in the old-stuff occurred more than 80 years ago,now completely disproven by onrushing event and developments. "Classic" economy --the old-stuff-- has not produced a new concept since Friedman's classic disavowal in statement prior to death: "We are all Keynesians now !".

Beatrice March 4, 2009 1:29 pm (Pacific time)

I read some interesting viewpoints earlier about this topic. That is during a recession, if you want private markets to pull us out of a recession, you do not raise taxes, nor do you punish achievers with higher taxes and fees. But if your agenda is to create an even bigger government along the lines of the socialistic policies one finds throughout Europe, then you do what Obama is doing now, where government is owning larger and larger percentages of the private businesses, as they attach very tight strings to any money they lend out. When the weather improves we will be seeing more infrastructure improvements happening, something that is always being done in all the states for as long as I can remember. But soon we will be hearing normal maintenance and improvements being made because of the stimulus. I guess we can measure how much more is being done than normal and how many jobs have been created.

ChrisJones March 4, 2009 9:22 am (Pacific time)

Maybe it's worth it in the long run as far as attracting industry to continue to hold this excellent ranking. I wonder what it is then that makes Oregon so unfriendly to prosperity, (and low unemployment rates) I guess you can cross high biz taxes off of the list, but my quest continues.

Vic March 4, 2009 7:08 am (Pacific time)

"Parasites Determine That More Blood Can Be Sucked From Hosts"

Henry Ruark March 3, 2009 1:07 pm (Pacific time)

"Anon": Yours sounds a bitter note encased in anomaly and easy distortion despite readable plain-English fact of matter. Standard neo-conery is that "One NEVER raises taxes in a recession", oft-repeated for further perverted impact. (You may find welcome gone when you return to gang.) SO when awkward truth now revealed by work of own-group "servicer" (!) now blows-back, you rapidly ice-it-over via inevitable complaint about fee level, as if that were heart of matter. It never was, nor will be now. Per usual neocon negativity, anything goes to disguise truth,distort reality and defy, delay, defeat any possible rational progress. "Using COST's figures, we've calculated that Oregon could increase business taxes by $1.6 billion annually and we'd just reach the level of state and local taxes being paid by businesses nationally," he said."That's writer Sheketoff. Thus flat fact remains: Oregon can reasonably assume strong position, rationally consider reality of tax reform, adding sensible, workable, testable options to legislative choice.

Anonymous March 3, 2009 11:17 am (Pacific time)

Raising taxes during a recession is nothing new. Look at how well California and New Jersey (and many other states) are doing who do this. Of course this study said nothing about various fees that accompany taxes, but let's not get too many facts.

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