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Increased Business Reporting Pondered
“The bottom line is Oregon is not an easy place to do business”

Introduced by Senator Chuck Riley (D-Hillsboro), SB 312 requires the Oregon Department of Revenue to establish reporting requirements on taxpayer information and for the Legislative Revenue Officer to produce a public report including that information collected for the tax returns. The information to be included is Oregon sales, Oregon taxable income, total amount of tax expenditures claimed under Oregon law, Oregon tax liability and total Oregon property tax paid during the tax year.

Newly elected Representative Pham (D-Portland) testified on the merits of the bill stating “when corporations hide how much they do or don’t pay it is not transparent to Oregonians”. She went on to explain that by taking a closer look at the areas that these C Corporations are using to avoid taxes, it will guide future reform of the Oregon corporate income tax system. Representative Phan also tried to explain that the -1 amendments would narrow the scope to require the reporting only by C corporations meeting the following criteria:
  1. Doing business in Oregon that are publicly traded (including those traded on foreign stock exchanges
  2. Have made sales outside Oregon and/or outside the US, and
  3. Claimed any tax expenditure, including deductions for net operating losses. She shared that “half of the major C corporations making over $100,000.00 annually are only paying the minimum corporate tax and this would help identify the loopholes that they are using to do this”.
A C corporation is a legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.

Daniel Hauser with Oregon Center for Public policy then explained to the committee that “most recent figures showed that seven out of 10 corporations paid just the minimum corporate excise tax. In fact, nearly half of all C-corporations with more than $100 million in Oregon sales pay the corporate minimum, which amounts to a paltry $100,000, an effective tax rate of 0.1 percent or less”. He closed his testimony by reiterating that “Enacting corporate tax transparency would increase accountability and tax fairness — a win for Oregonians”.



However, increased transparency may very well shed light on where to increase taxes, create new ones or close loopholes in existing tax code, but it may not necessarily be legal. Nikki Dobay is a nationally known state tax lawyer with significant experience and understanding of state tax policy with Eversheds Sutherland who focuses on sophisticated multistate tax issues. She testified that “Federal law and the Internal Revenue Service Taxpayer Bill of Rights prohibit the disclosure of federal returns and return information except in very limited circumstances”. She continued “SB 312 raises significant taxpayer privacy issues, as the publishing of the report to the public may result in disclosure of information ultimately found on federal tax returns”. In addition, she raised the concern that SB 312 could have constitutional consequences because it exclusively targets multistate taxpayers. The legislation requires the public report to include the tax information for C corporations that have an Oregon tax obligation of less than 100 percent. Thus, only C Corporations that operate both within and outside the state would be compelled to report. C corporations that operate exclusively within Oregon would not have their taxpayer information disclosed to the public.

Scott Bruun, Director of tax and fiscal policy for Oregon Business and Industry (OBI) closed out today’s testimony with some very powerful statements. OBI projects that tax on Oregon businesses are projected to go up by $1.8B between 2019- 2022 when new taxes introduced in 2019 are fully phased in. This is a 41% increase. He noted that Oregon already has a very small number of publicly traded companies headquartered in Oregon. “Companies are not beating down the door to move to Oregon”, he stated. SB312 will not help overcome that challenge and may also prove to be a disincentive for companies already in Oregon to stay. He closed with “The bottom line is Oregon is not an easy place to do business”.

--Terese Humboldt

Post Date: 2021-02-11 07:15:09Last Update: 2021-02-10 17:29:58

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