Are Oregon Businesses Only Paying $10 A Year?

Posted on January 7, 2010 by

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One of the most pernicious and misleading claims of the pro-tax advocates in the Measures 66 & 67 debate is that Oregon businesses are only paying $10 a year in taxes.

What they fail to explan is that the $10 tax limit only applies if a business has LOST money for the year. Whenever Oregon businesses make a profit, they pay taxes on that profit, and it’s WAY more than $10.

The problem is that with the recession, very few businesses are making a profit right now, and most have cut back all they can to minimize their losses. When there are no profits, there is less money coming in to state coffers.

So what is the legislature’s solution? To cut back their spending like the rest of us? Of course not! They’ve increased all their budgets, paid for the non-essential pet projects first (like state employee raises and renovations) and underfunded essential services (schools, fire, police), in violation of the Oregon constitution, so they can claim a shortfall and demand a tax increase.

Except this increase is not on net profits, it’s on GROSS sales, so that Oregon businesses will be forced to pay taxes on whatever they sold, even if they can’t cover their expenses and find themselves IN THE HOLE this year!

This explains why the Oregonian, one of the most liberal publications in the state, has come out against these measures. Their paper didn’t make a profit this year, and having to pay extra taxes on their losses could ruin them!

To pay this tax, businesses that are barely holding on as it is will have three choices: lay off more workers, close up shop or leave the state.  More businesses going under, more lost jobs.  Then how will the legislature get the tax revenue they need next year?  We’ll have fewer businesses, more people collecting unemployment, and fewer paying payroll taxes.

Those businesses that survive will be forced to increase their prices to pay this back-door sales tax, greatly impacting the middle class.

Putting an extra tax burden on businesses that are already losing money is short-sighted and foolish. Most politicians are lawyers and have never worked in the private sector or taken an economics course, much less run a business. They pass laws that look good on paper and have no understanding of the long-term consequences.

Cross posted at ThoughtsFromAConservativeMom.com

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