“For the privilege of doing business in Oregon.” Those exact words are in the Corporate Activity Tax legislation Oregon Democrats and Governor Brown forced through the legislature in 2019. The bill was so rushed lawmakers didn’t have time to assess unintended consequences, fully comprehend testimony from economists or realize the significant tax pyramiding (additive taxation in each step of local supply chain product development) that some businesses experience. The CAT is a gross receipts tax imposed on commercial activity in Oregon… not a tax on profits, but a tax on gross sales. Industries like housing will see an inflated effective tax rate because they are additive at every single stage of production. Representative Jack Zika shared this example at a town hall with his constituents who are already worried about the cost of housing and affordability. Zika explained the added burden to build a house is not 0.57% it’s actually 5.57% (10 production steps X 0.57%), or more if you consider compounding escalation.
Oregon voters just defeated this sales tax like scheme in 2016 but the super-majority pushed it through the legislature under the disguise of $1 Billion for schools. Of course, most of the dollars will never reach kids in the classroom but rather will go to Wall Street to fund Oregon’s $26 B in pension debt.
If you would like to read one economists testimony opposing the CAT as poor policy (Tax Foundation), click here: https://taxfoundation.org/oregon-gross-receipts-tax-raise-revenue-public-education/
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