As Maryland Goes, So Should Oregon

Because Oregon’s legislature is considering proposals to change Oregon’s $10 minimum corporate tax on those corporations with no tax liability, this is a crucial time for Oregon to follow Maryland’s lead.

(SILVERTON, Ore.) - If we lived in Maryland we’d have the same state drink (milk) and state dance (square) as Oregon. But unfortunately the important similarities would end there. For example, if we lived in Maryland we would have important information from our state about which large companies are not paying state income taxes. Here in Oregon, policy makers are operating more in the dark.

In Maryland, the state revenue agency discloses a list of the state’s 150 largest employers, broken out by industry categories and size. From this list you can see, for example, the names of the 25 largest corporations in Maryland and can learn that nine of them paid no corporate income taxes in 2002. You can’t see which nine, but you get a better picture of the types of companies that escape tax liability.

Oregon’s Governor, legislature and voters don’t get that type of information from our Department of Revenue. The Oregon Department of Revenue has repeatedly rebuffed Oregon Center for Public Policy requests to have the Department produce a Maryland- style report. Each time they offer excuses. No excuse can diminish the value of the information to tax policy decision-makers. If Maryland can do it, there’s no federal law standing in Oregon’s way; Oregon just needs the will.

Many politically savvy Oregon corporations don’t want to eliminate the $10 minimum tax; they want to increase it because they know the ten bucks that most corporations pay is a public relations liability. The fact that two-thirds (67%) of Oregon’s corporations pay just ten bucks for the privilege of conducting business in Oregon does not sit well with Oregon voters.

The business leaders know that “2/3’s Pay $10” could be a bumper sticker looking for a campaign to return corporations to a time when they picked up a fair share of Oregon’s income taxes. Today they carry only about seven percent of the income tax load, compared to more than 18 percent a generation ago.

We should raise the corporate minimum tax to a more respectable level, but that won’t fool voters into thinking corporate Oregon is pulling its share of the load for education, children’s health care, highway troopers and other important public services. None of the proposals on the table in Salem this session would result in corporations paying the 18 percent that they used to.

The legislature’s first attempt to increase the outdated $10 minimum tax was based on a proposal by the House Republican caucus. Even though it was incorporated into what Minority Leader Wayne Scott called an “historic agreement” with the Democrats, the Republican caucus went south on the plan when it became time to actually vote for the measure.

The meltdown over the minimum tax proves the adage that when it comes to changing tax policy, the losers are always a lot more vocal than the winners are grateful. Large companies like Nike and Intel who hoped that the increase in the corporate minimum tax would ultimately benefit them by averting comprehensive corporate tax reform were drowned out by business interests who didn’t like the Republican-designed minimum tax increase.

Unfortunately, the debates about the minimum tax have not included a meaningful discussion about why and how our broken tax system enables profitable Oregon companies to get away with paying so little in income taxes. That’s the question none of the business groups want the legislature to explore.

The legislature should raise the corporate minimum tax. Whether or not they do, though, the public still needs more information about who pays the corporate minimum tax. It will help us design a better minimum tax and help us better understand why our corporate income tax system has collapsed and how to restore it to health. If Maryland can provide this useful information, so can Oregon.

Chuck Sheketoff is the Executive Director at the Oregon Center for Public Policy. He can be reached at OCPP, P.O. Box 7, Silverton, OR, 97381, by telephone at 503-873-1201, or by email at csheketoff@ocpp.org.

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Hank Ruark March 29, 2007 6:30 am (Pacific time)

Review of Comments indicates we need to make sure all those deeply interested have visited website for OCPP. Solid, documented data in depth is there for "see with own eyes" on this one. IF needs must, Google for access link; OR Wikipedia for full background.

Hank Ruark March 28, 2007 3:17 pm (Pacific time)

OCC, C-Mudge: Don't miss story-above on national report re taxing low income families. Common sense tells us if we force them deeper into desperation, they will respond negatively rather than win satisfactions for themselves by what they can do for their families via continued hard work.

Hank Ruark March 28, 2007 8:37 am (Pacific time)

OCC, C-Mudge: Seems to me Sheketoff playing our song, seeking much fuller and more accessible data on whole range of corporate tax information. OCPP has already won widespread admiration and reliance for its solid documentation of economic and policy points...on which I have relied for years now. That's NOT to say full information is out there for probing examination as you suggest...but that's at will of corporate lobbyists vs the weak sisters (and brothers, too!) of our last few Legislatures. SO let's push and yell until we get what's really needed, right out there on the Internet for all to see and understand --which surely reflects both RADICAL TRANSPARENCY and Corporate Social Responsibility...and please remember: "You read it here first !" to pillage famous newspaper's top-of-page slogan headline.

Curmudgeon March 28, 2007 1:08 am (Pacific time)

OCC: What you are saying is precisely WHY I want to see specific figures and details, and would like an explanation of just what the "corporate income tax" is and how it's applied. If corporations are already paying their fair share, fine, they should not be taxed more. If they are NOT paying their fair share, then I would support an increase in the corporate tax. But it's nearly impossible to find a source of information that is truly objective. Intel and Providence are the state's largest employers. If they are paying just the $10 minimum, something is wrong. On the other hand, Hershey Chocolate Co. is registered in Oregon but has no presence here, and is not incorporated in Oregon. They provide no benefit to the state and receive no benefit. Why should they pay a $500 or $1000 minimum tax? They shouldn't. And maybe they don't, but until someone explains the corporate tax to the general public we don't know. Once a corporation has paid all of the things you listed (expenses) and subtracted them from gross receipts, what's left over is their profit. They should pay a fair tax on that profit. What really annoys me is that both sides in this debate are doing a lousy job of publicizing the FACTS. It's all hyperbole, BS, and obfuscation. How about some down-home, backwoods, straight talk?

OCC March 27, 2007 11:23 pm (Pacific time)

"that won’t fool voters into thinking corporate Oregon is pulling its share of the load for education, children’s health care, highway troopers and other important public services." Exactly what *is* Corporate Oregon's "fair share?" They already pay the salaries of their workers that pay income tax. They already pay out dividends to shareholders who then pay taxes on the profits. They already pay the gas tax of their fleets that drive the roads. They already pay property taxes on the property they own (which they paid Oregonians to build upon). Many already pay for medical insurance so their employees don't have to be covered by the Oregon Health Plan. Like smokers, corporations are easy targets for individuals who don't want to pay the full cost of what they take out of the system. It's always easier to find someone else to pay.

Hank Ruark March 27, 2007 7:58 pm (Pacific time)

C-M et al: Here are two basic facts from Sheketoff to start on corporate tax burden as it now is, and as it once was and should be again !: "Today they carry only about seven percent of the income tax load, compared to more than 18 percent a generation ago. "We should raise the corporate minimum tax to a more respectable level, but that won’t fool voters into thinking corporate Oregon is pulling its share of the load for education, children’s health care, highway troopers and other important public services. None of the proposals on the table in Salem this session would result in corporations paying the 18 percent that they used to."

Curmudgeon March 27, 2007 7:57 pm (Pacific time)

Hank, the only argument I have with what you suggest is that I don't agree with using OCPP as a source. They have an agenda, and I don't trust them to be objective, even though I probably agree with their agenda. I just want unambiguous, unadulterated facts, so I can make up my own mind. Even the figures you quote from ITEP are very simplisitic. While they seem unfair at first glance, that may not be the case if they are examined in more detail. What is included in "state and local taxes?" Where did the $308,000 figure come from? That seems a rather odd figure for someone to just pull out of the air. Would the situation not look so lopsided if some other figure, say $400,000 or $250,000, were used? It would be much more informative, and give a more accurate picture, if they were to give an itemized breakdown of exactly what taxes were paid by each, in dollar amounts. But I suspect they too have an agenda that would not be well served by doing that. Any time I see statistics that are very general, I find them very suspect. My immediate response is "show me the figures."

Hank Ruark March 27, 2007 5:59 pm (Pacific time)

C-mudge: Right on the mark...we have job to do to make essential facts-known on corporate tax situation. Will seek out pieces for analysis soon, with help from a number of fine sources, including OCPP materials on hand.

Curmudgeon March 27, 2007 4:13 pm (Pacific time)

I keep hearing about "corporate income tax," yet no one writing about it ever seems to explain exactly what it is. It would be helpful if someone would explain it simply and thoroughly so that everyone, including myself, would fully understand what is being discussed. Does it apply just to corporations that have a physical presence in Oregon? Or does it apply to any corporation registered in Oregon, even if it has no physical presence and receives no tax supported services here? I agree that any corporation with a physical presence here, and doing business here, should be paying more than $10. But here's a hypothetical situation. Let's say the Idaho Kinky Potato Company has no physical presence in Oregon, yet is registered here for the sole purpose of protecting their company name in Oregon. They have no employees or facilities here, and receive no tax supported services in Oregon, and they have paid the required fee to register the name. Should they have to pay a large corporate income tax in Oregon and the other 48 states where they have no presence? It's my opinion they should not. Maybe they already don't, but since I don't understand the corporate income tax I don't know. And I'm sure a majority of the citizens of Oregon share my lack of understanding. It would be a great service if Mr. Sheketoff, or someone, would provide us citizens with enough understanding of the law that we can form an intelligent and informed opinion on the subject.

S.LaMarche; March 27, 2007 3:57 pm (Pacific time)

I think the same.Corporate taxing of $10.00 per ammum is, from my point of view, ludicrous and needs to be changed. Oregon is the only state to fall for and continually maintain this practice of letting the corporations conduct "buisness as unusual" for $10.00 a year in tax payments.,while the individual wage earner picks up the difference! So vote correctly on this!

Hank Ruark March 27, 2007 3:57 pm (Pacific time)

Pertinent fact from OCPP press release on taxes demanded from poor families in Oregon: "In Oregon, the poor pay more in taxes than other taxpayers as a share of their income when all local and state taxes are taken into consideration. According to a report by the Institute on Taxation and Economic Policy, Oregon’s lowest income non-elderly households, those earning less than $16,000, paid 9.4 percent of their income in state and local taxes in 2002, while the most well-off non-elderly households, those earning over $308,000, paid 6.1 percent of their income in state and local taxes." No way anyone can make that even SEEM fair !

Hank Ruark March 27, 2007 2:04 pm (Pacific time)

Heartily agree with every point made by knowledgeable, authoritative policy-guru Sheketoff. After several years of seeking solid-source information from him and his cohorts, have never had reason to regret relying on strength and common sense of their work. From previous experience in a number of states and situations, I second his solid request for action and access to this essential information, demanded for sensible citizen decision, either to support or to bring amendment to whatever the Legislature may choose to do, in its sometimes incoherent and frustrating considerations. The wit, wisdom and the WILL of the people is clearly evident; when will Legislative action follow ??

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As Maryland Goes, So Should Oregon

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