Oregon Votes Down Gross Receipts Tax Measure

For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...

By Paul Shukovsky

Nov. 9 — Oregon voters have rejected a proposal that would have transformed the state’s corporate tax base from one determined mostly by net income to one determined mostly by Oregon sales or gross receipts of a relatively small group of large corporations.

Measure 97 would have required C corporations or affiliated groups of corporations filing a return under ORS 317.710 that have Oregon sales of more than $25 million to pay a minimum tax of $30,001 plus 2.5 percent of the excess over $25 million.

With 634 of the state’s 1,343 precincts reporting, the ballot measure was failing 59 percent to 40 percent, according to results reported by the Oregon Secretary of State’s office.

Had Measure 97 passed, it would have extracted $6.1 billion in revenue from about 1,000 corporations over the 2017-19 biennium, according to a report from the state Legislative Revenue Office. If it had been in force for the 2013 tax year, the state would have collected about $2.9 billion, compared with the $461 million received under current law.

‘Misled by Millions of Dollars.’

The measure was the progeny of public employee unions that want to see an infusion of revenue into state government and the services it provides. “We really took on the largest corporations,” Service Employee International Union Local 503 President Rob Sisk told Bloomberg BNA late Nov. 8. “In the end, I think the voters were misled by the millions of dollars corporations put in to oppose this. That was a major factor.”

While public employee unions raised $16.4 million in support of the measure, they were outspent by corporate donors who raised $26.1 million to defeat it, according to Oregon Secretary of State records accessed Nov. 8.

The largest donors supporting the measure were Service Employee International Union entities that collectively contributed about $5 million. The largest donors to defeat it were Costco Wholesale Corp. and Kroger/Fred Meyer, each with about $2.4 million in cash contributions. Other big corporate donors included Lithia Motors Inc., the Oregon Association of Realtors, Chevron Corp., Equilon Enterprises LLC, Cambia Health Solutions Inc. and Weyerhaeuser Co.

The new revenue generated by the gross receipts tax was intended to benefit early childhood and K-12 education, health care and senior services.

A Better Oregon Coalition

Sisk expressed his resolve to continue fighting to increase taxation on corporations. “We will use whatever means we can to make corporations pay their fair share. Whether it be through legislative action, mobilizing citizens or other organizations, we will continue the fight for Oregonians who deserve and have a right to quality education, senior services and health care.”

Legislative Revenue Officer Paul Warner told Bloomberg BNA in May that if the measure passed, the impact on prices was estimated to be “a little less than 1 percent increase,” resulting in what he called “a marginal change towards regressivity. The change is pretty minor.”

That impact played a major part in the campaign to convince Oregonians to reject the measure.

Ben Unger, who managed the ballot measure campaign under a coalition called A Better Oregon, released an e-mail late Nov. 8 saying the coalition’s work would continue. “We wish we had won tonight, for every student, every senior unable to live independently, and every Oregonian struggling to afford health care.

“We didn’t win this election, but we won the debate,” Unger continued. “No Oregonian believes we should be dead last in corporate taxes while schools and families struggle. And we did it by building something we’re all proud of: A historic coalition of 300 organizations representing 500,000 Oregonians. The A Better Oregon coalition is like nothing we have ever had before, and it will allow us to continue the cause.”

To contact the reporter on this story: Paul Shukovsky in Seattle at PShukovsky@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.