Tax Fairness Initiatives: What we won in the January 2010 Special Election
Summary:
If Oregonians vote “yes” on the ballot initiatives, then corporations and wealthy Oregonians will pay just a little bit more in order to prevent deep cuts to essential services like education, healthcare, and public safety.
The two laws passed by the legislature in 2009-increased tax fairness. Together they are expected to raise $733 million over the next two-year budget. These two bills are being referred to Oregonians to vote on this in a special election to be held on January 26, 2010.
“Yes” votes on the initiatives will ensure this revenue is available for important programs. “No” votes will lead to huge additional cuts to critical state services.
Today, 63% of C-Corporations doing business in Oregon pay only the $10 corporate minimum, this hasn’t changed since 1931. With a “yes” vote they will finally be required to pay more.
There is a new business minimum tax based on sales in Oregon, and there’s an increase in the tax rate for C-Corporations -- businesses will pay one or the other, not both of these increases.
The new minimum tax is $150, unless a business has sales of more than $500,000. Here’s the chart:
If a C-Corporation shows profits, their tax rate on profits of less than $250,000 will remain unchanged. On profits of more than $250,000, the rate increases from 6.6% to 7.9%. In 2013, the rate returns to 6.6% for all profits below $10 million, with a permanent increase to 7.6% only on profits of more than $10 million.
“Yes” votes on the initiatives will ensure this revenue is available for important programs. “No” votes will lead to huge additional cuts to critical state services.
Corporate Tax Reforms:
Today, 63% of C-Corporations doing business in Oregon pay only the $10 corporate minimum, this hasn’t changed since 1931. With a “yes” vote they will finally be required to pay more.
There is a new business minimum tax based on sales in Oregon, and there’s an increase in the tax rate for C-Corporations -- businesses will pay one or the other, not both of these increases.
The new minimum tax is $150, unless a business has sales of more than $500,000. Here’s the chart:
If a C-Corporation shows profits, their tax rate on profits of less than $250,000 will remain unchanged. On profits of more than $250,000, the rate increases from 6.6% to 7.9%. In 2013, the rate returns to 6.6% for all profits below $10 million, with a permanent increase to 7.6% only on profits of more than $10 million.
A real world example: a corporation making $260,000 in profit will pay an extra $130 in taxes (1.3% of the $10,000 above $250,000). A corporation declaring no profits will pay a minimum tax of about one tenth of one percent of Oregon sales. A couple making $260,000 in taxable income will pay an extra $180 (1.8% of the taxable income above $250,000).
$473 million in new revenue will come from an increase on the richest Oregonians. While there are 1.6 million Oregon taxpayers, only 39,000 will pay more under the new personal tax law. This will increase tax fairness. There will be no change for 97.5% of taxpayers - families with taxable income of less than $250,000 ($125,000 for individuals). There will be rate increases on income above these amounts. For example, a family with $350,000 of Oregon taxable income will see a tax increase of $1800. A family with $1,250,000 of taxable income will see a tax increase of $19,500. In 2012, these increases drop to $900 and $9,000.
There has been some concern that small business owners are targeted by these increases. Even though most wealthy people make some of their money from a “small business,” most of them don’t make most of their money that way. Many of them have an interest in a small business as a sort of sideline; they’ve a beach rental, investment partnership, and/or a hobby farm. The average wealthy person makes 42% of their income from capital gains on investments, 31% from wages, and only 22% from small business sources.
A couple that owns a small business will be affected if they are taking more than $250,000 out of their business. Most small business owners don’t have $250,000 left after paying all their expenses. Those who do, usually invest the money within the business to stimulate its growth.
A real world example: a couple making $260,000 in taxable income will pay an extra $180 (1.8% of the taxable income above $250,000).
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Tax Fairness Volunteers specializing in Income Tax Issues:
Jody Wiser, policy analyst/lobbyist
Peggy Woolsey, policy advocate/lobbyist
Noah Heller, policy/communications
Louis Payne, editor
Personal Tax Reform:
$473 million in new revenue will come from an increase on the richest Oregonians. While there are 1.6 million Oregon taxpayers, only 39,000 will pay more under the new personal tax law. This will increase tax fairness. There will be no change for 97.5% of taxpayers - families with taxable income of less than $250,000 ($125,000 for individuals). There will be rate increases on income above these amounts. For example, a family with $350,000 of Oregon taxable income will see a tax increase of $1800. A family with $1,250,000 of taxable income will see a tax increase of $19,500. In 2012, these increases drop to $900 and $9,000.
There has been some concern that small business owners are targeted by these increases. Even though most wealthy people make some of their money from a “small business,” most of them don’t make most of their money that way. Many of them have an interest in a small business as a sort of sideline; they’ve a beach rental, investment partnership, and/or a hobby farm. The average wealthy person makes 42% of their income from capital gains on investments, 31% from wages, and only 22% from small business sources.
A couple that owns a small business will be affected if they are taking more than $250,000 out of their business. Most small business owners don’t have $250,000 left after paying all their expenses. Those who do, usually invest the money within the business to stimulate its growth.
A real world example: a couple making $260,000 in taxable income will pay an extra $180 (1.8% of the taxable income above $250,000).
---------------------------
Tax Fairness Volunteers specializing in Income Tax Issues:
Jody Wiser, policy analyst/lobbyist
Peggy Woolsey, policy advocate/lobbyist
Noah Heller, policy/communications
Louis Payne, editor