Portland’s largest business organization said Thursday it can accept a $2 billion increase in state business taxes, provided lawmakers change the structure of the proposed tax hike.
“We appreciate the work that has gone into developing this proposal and we are committed to continuing to work with you to reach agreement on a package that will truly make a difference for Oregon’s entire education system,” Portland Business Alliance chief executive Andrew Hoan wrote in a letter to lawmakers Thursday.
The letter represents the first time the Portland Business Alliance has taken a position on the tax hike, the biggest issue before the Legislature this spring.
Lawmakers and Gov. Kate Brown want to raise taxes on businesses to pay for an additional $2 billion for schools, spread over the state’s two-year budget cycle. Legislators leading the charge are pursuing a gross-receipts tax levied on nearly all business in the state.
That proposed tax structure has split Oregon’s business community. Some companies, notably Nike, are on board with the current proposal. A gross-receipts tax would have a relatively modest effect on companies that do most of their sales out of state and have small capital budgets.
Intel and many other companies say a gross-receipts tax would have a “pyramiding” effect, layering taxes on each level of a supply chain. And the state’s largest business organization, Oregon Business & Industry, is fiercely opposed.
It has proposed an alternative, a value-added tax, also known as a business activity tax. It would allow companies to subtract capital spending and purchases from other businesses from their taxable activity.
OBI, which had previously indicated it was open to higher taxes under the right circumstances, now seems to be less receptive. It said Wednesday that it wants the Legislature to “slow down.” The organization wants more study of the tax proposals, and wants it considered in the context of other taxes and fees under review.
The Portland Business Alliance, by comparison, said Wednesday that it has talked with its members and has “not heard any broad concern with the approximately $2 billion in new revenue for education.”
In Portland, though, the business alliance said a gross-receipts tax would have a compounding effect on businesses. That’s because of a gross-receipts tax on large businesses city voters approved in November.
The Portland Business Alliance, like the state organization, wants action to contain the state’s soaring pension deficit included along with any tax hike. The governor and lawmakers are considering various proposals to do that, including a proposal from Brown that would take funds from the surplus in the state’s workers’ compensation program and require workers to contribute more to their own pensions.
The state teachers union is adamantly opposed to higher pension contributions from its members; Oregon Business & Industry is unequivocally against tapping the workers’ compensation surplus.
The Portland Business Alliance took no position Thursday on either idea. Hoan wrote that “we are encouraged by the proposals and attention to the matter.”
-- Mike Rogoway | twitter: @rogoway | 503-294-7699