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House Votes to Cut Taxes for Largest Corporations

The House of Representatives further strained the cash-strapped budget when it voted 38-18 to change the way corporations are taxed in a manner that will cost Oregon $12 million in the 2005-07 biennium, and double that amount in successive biennia.

The bill, HB 3183, would enable the biggest businesses in Oregon to virtually elude paying their fair share of taxes by basing their entire corporate income tax calculation on in-state sales – rather than using the current taxing formula that considers profits, payroll, and property. This bill benefits enterprises (such as Nike and Intel) whose products are marketed mostly out of state or worldwide, and who will therefore pay no corporate taxes on most of their income if only in-state sales are taxed. Conversely, smaller businesses, whose products and services are marketed chiefly inside Oregon’s borders, will pay more in taxes.

Opponents opposed the bill, challenging proponents’ contention (unsupported by data) that it would induce businesses to locate or expand in Oregon and that it would produce needed jobs by revitalizing the economy. In fact, the Legislature already changed the apportionment formula two years ago, and it had no beneficial effect on job-creation or economic recovery. Seventeen Democrats were joined by one Republican, Rep. Greg Smith (R-Heppner), in opposing the bill, which now goes to the Senate for consideration.

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