Skip to comments.New Year, New Tax: What You Need to Know About Oregonís Gross Receipts Tax
Posted on 01/24/2020 3:25:24 PM PST by Twotone
The 2019 Oregon Legislature established a new tax affecting all firms that do business in Oregon. While it is called by its misnomer the Corporate Activity Tax, the CAT actually applies to most types of organizational entities such as partnerships, individuals, limited liability companies, and trusts that have commercial activity generated in Oregon in the regular course of their trade or business. It is a tax paid annually for the privilege of doing business in Oregon. Initial expectations are that it will raise about $1 billion in new revenue annually. These funds are to be set aside for exclusive use for education and school purposes.
By now, every business in Oregon should have received a generic letter from the Oregon Department of Revenue alerting them to this new tax. This letter is a helpful primer on the CAT, but is not incredibly useful in figuring out the impact on each businesss specific situation. As is usual with all tax law, the devil is in the details.
How did the Corporate Activity Tax come about? In May 2019, the Oregon Legislature passed HB 3427. In this bill, it established the CAT as the primary mechanism to fund the new Fund for Student Success. Then in June 2019, the Legislature passed HB 2164 which provided technical corrections to HB 3427. As a follow up, the Department of Revenue held informational and listening sessions around the state through the last half of 2019. In December 2019, the Department of Revenue issued 12 temporary rules related to this new tax. The agency intends to release additional temporary guidance through March 2020.
(Excerpt) Read more at cascadepolicy.org ...
It's for the children.
Great way to get companies to leave.
But, that isn't what it is going to be used for.
So are lawyers exempt from this new tax?
It's for the children.
Except it will never happen. The money will just be used to buy votes like all the rest of it.
Either that, or lining Hunter Biden’s pockets.
Plus the tax in Portland too, so that makes an effective sales tax rate of 1.57% in Portland and .57% statewide? Yuck, not what I wanted to hear when considering relocation there.
Money is the ultimate fungible resource. They can now spend tax money from other sources, that used to go to education, for non-educational purposes.
“These funds are to be set aside for exclusive use for education and school purposes.”
A classic rat trick, one of their favorites.
What kind of money are we talking about? Per the revenue impact of HB 3427, each of the next biennia will generate $1.6 billion to $3.1 billion for the Fund for Student Success. However, $423 million to $762 million will be sent to the general fund, an amount totaling approximately 25% of the new tax. In addition to collected taxes from businesses, the government will also add employees. Per the fiscal impact statement of HB 3427, government will also grow. In the first biennium, 87.62 FTEs will be needed to administer the various accounts within the Fund for Student Success and for the Department of Revenue to administer the CAT.
Establishes Fund for Student Success.
Directs Department of Education to conduct study to examine best methods for funding state’s system of kindergarten through grade 12 public education.] Directs department to submit report to interim committee of Legislative Assembly no later than September 15, 2020.] Specifies uses of fund, including transfers to State School Fund, Student Investment Account, Statewide Education Initiatives Account and Early Learning Account. Directs moneys to be transferred to State School Fund from Fund for Student Success. Increases fiscal year limit for transfers from State School Fund to High Cost Disabilities Account. Establishes Student Investment Account for purpose of distributing grants to school districts and certain public charter schools. Prescribes allowed uses for grant moneys, grant application requirements, inclusion of performance growth targets into grant agreements, calculation of grant amounts and accountability measures. Directs Department of Education to provide technical assistance related to grants, including coaching programs for grant recipients that did not meet performance growth targets and intensive program for high needs school districts. Directs department to make annual report to committees of Legislative Assembly related to education. Establishes Statewide Education Initiatives Account. Prescribes allowed uses of account. Provides for expansion of school breakfast and lunch programs, operation of youth reengagement system, establishment of Statewide School Safety and Prevention System, development and provision of statewide equity initiatives, provision of summer learning program for certain schools and funding for early warning system for high school graduation and directs Department of Education to fund those programs through account. Directs department and Educator Advancement Council to develop plan funded by account that would provide effective combination of programs and initiatives for professional development of educators. Establishes Early Learning Account. Prescribes allowed uses of account. Establishes Early Childhood Equity Fund. Provides for early childhood support grant program, to be funded by account. Decreases personal income tax rates. Imposes corporate activity tax, to be measured by commercial activity, defined as total amount arising from person’s transactions and activity in regular course of business. Exempts persons with taxable commercial activity of $1 million or less. Defines additional excluded persons exempt from corporate activity tax. Allows subtraction for percentage of taxpayer’s cost inputs or labor costs. Includes provision for sourcing of commercial activity to state. Requires persons and unitary groups with commercial activity above threshold to register with Department of Revenue. Preempts local government imposition of taxes upon commercial activity or receipts from grocery sales, other than existing taxes. Transfers net revenues from corporate activity tax to Fund for Student Success. Defines terms. Applies to tax years beginning on or after January 1, 2020. Takes effect on 91st day following adjournment sine die.
(Looks like another slush fund.)
no sales tax Oregon has found a way to institute a top down embedded tax at twice the average sales tax rate in most red states. Now they are at 15 percent embedded corporate tax... which gets them close to California’s 15 percent sales tax in many localities, right?
It is time to abandon Oregon.
bye bye intel, daimler/chrysler and nike.
I read the whole thing...they forecast 1.6 billion to 3.1 Billion each Bienia (every two years with 423 million to 762 million going into the general fund....so no its not for the kiddies....what happened to the lotteries profits going to education ? OH thats right it somehow gets eaten up with the massive labor costs that “just” happened to occur...
Until we find a better social use for the money like for homelessness.
I read the whole thing...they forecast 1.6 billion to 3.1 Billion each Bienia
I’m betting their model didn’t include companies packing up ands leaving because off the new tax.
Good bye jobs, good bye companies, hello raised consumer prices. This will fix the housing crisis.
The money will just be used to buy votes like all the rest of it.All new revenue in every city, county, state will have to go to fund public employee's pension fund(s)...period.
Yet another reason to not live on the West Coast. Legalized theft. Businesses will leave.
If you would like more information about what's happening in Oregon, please FReepmail me.
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