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Special Report: Oregon’s Continuing Tax Battle

Posted By Administration, Tuesday, June 6, 2017

PIA Oregon has been carefully watching this unfolding tax battle. The association is about worried will impact independent insurance agents.

Corporate taxing Measure 97’s November election battle ended in a very lopsided no vote. The people of Oregon — after some $50 million was spent on the campaign — gave a resounding no to tax increases on corporate sales of over $25 million a year. Voters appeared to believe those taxes would be passed onto them in the form of higher prices.

Undeterred, Measure 97’s proponents have now moved the battle to the Oregon Legislature and again to the initiative process. One of the more active proponents is the Oregon Education Association (OEA). It is filing a new initiative for the November ballot that would raise $1.75 billion a year for K-12 public schools and for higher education.

And — yes — it’s a corporate tax.

Plus, the union — one of the major members of the tax-raising group Our Oregon — wants a second initiative on the ballot to make it easier for the Oregon Legislature to raise corporate taxes. That permission — said OEA President Hanna Vaandering — would remove the need to get a 3/5th supermajority for a tax raise. But — if passed — the initiative will only let the Legislature do the jump for education purposes.

“Parents and students are fed up with having the third largest class sizes in the nation. Having strong public schools is an Oregon value, but you would never know by looking at the Oregon legislature. These ballot measures seek to put the power back in the hands of the people not the powerful business lobbyists that control Salem,” she said.

The union’s tax proposal would set the rate at 0.95% compared to Measure 97’s rate of 2.5% and it will raise considerably less money.

PIA Oregon Lobbyist Lana Butterfield said the association is currently reviewing the initiative proposals.

Meanwhile, in the Legislature the corporate taxing effort is being led by Beaverton Democrat Sen. Mark Hass. He thinks there’s a good chance a gross receipts tax could actually pass this session of the Legislature.

“We're at a crossroads. We have a choice to do nothing because it’s too hard. We have a choice to do some tried and true short-term changes, tax increases. And third, we have a choice to reform our system that will add a measure of stability and reform I think is the key,” Hass said.

His proposal basically reduces personal income tax rates and while imposing a corporate activities tax of somewhere between 0.4% and 0.7% on gross income over $1 million. Those businesses with gross receipts under $1 million will pay a flat tax of $250. And all businesses operating in Oregon must register with the Oregon Department of Revenue.

In addition to the new tax, Hass’ proposal does away with corporate excise and income taxes and adds what is basically a corporate sales tax.

Lana Butterfield said the PIA Oregon is very concerned and on top of the bill. She said she and others on the PIA Oregon Legislative Committee met with Sen. Hass and Legislative Revenue staff and told them that:

  Insurance agents don’t set the price of their product and can’t pass it along to consumers.

  Insurance agents work on commission.

  The tax reform measure shouldn’t include premium value as gross revenue; insurance agents should be taxed only on commissions.

  The tax reform measure should have a special, much lower rate, for businesses which have high levels of pass through income (such as insurance and advertising).

She said the committee learned, “Agents won't be exempted. They will pay the minimum amount depending on what the floor is finally set at. They will be taxed on commissions, not premiums.”

The idea of another corporate tax battle is not appealing to Oregon’s business community and Republican leadership. The Oregon Business Plan Coalition — who successfully fought Measure 97 — is now called Brighter Oregon. Spokesman Pat McCormick said, “It's disappointing to learn that the government-employee-union-funded ballot measure advocacy group behind last year's failed Measure 97, has filed three new measures for the November 2018 ballot. Oregonians don't benefit when a single interest lobbying group uses the initiative process to work around the legislature just to get its own way.”

He said all that was accomplished in last year’s Measure 97 vote was the spending of $50 million by both sides and deep polarization of conservatives and liberals.

Brighter Oregon contends just raising taxes is not the solution. Any support the group — and other conservatives and conservatives in the Legislature — for the idea will have to be accompanied by spending cuts and especially in public pensions and other benefits.

Democrats have countered that they’ll only consider spending cuts if Republicans agree to increase corporate taxes.

 

Source links: OregonLive.com link 1, link 2

Tags:  business tax  Insurance Content  Insurance Industry  Insurance news  Special Report: Oregon’s Continuing Tax Battle  Taxes  Weekly Industry News 

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