The new tax that may be levied on Oregon businesses to raise money for schools is a sales tax by another name. You won’t see it added to the price tag on goods made in Oregon, but it will be there, just the same.
The bill sent to Gov. Kate Brown for her signature will impose a gross receipts tax on businesses with sales over $1 million. They’ll be allowed to deduct some expenses, and the state’s income tax rates will drop a bit. The bill also excludes taxes on groceries, sort of.
Consider groceries. The measure, House Bill 3427, specifically excludes grocers from having to pay the tax on goods they receive. On the other hand, a large Oregon berry farmer selling his crops to a wholesaler would pay unless the farmer certified the crops would be sold outside Oregon. The farmer no doubt would raise berry prices to cover the tax, and the wholesaler would up the price for those same berries destined for your local grocery store. The tax is there, in other words, just hidden from public view.
Even with substantial majorities in both houses, the Legislature’s Democrats had trouble getting the bill passed. It did sail through the House on a party-line vote, but Senate Republicans staged a walkout that lasted more than four full days. And without two Republicans, there was no quorum in the Senate. They came back Monday and the measure was approved within hours.
The walkout may be the GOP’s only successful effort to flex its muscle in this legislative session. Senate Republicans stood fast until Democrats agreed to kill both a badly needed tightening of state law regarding vaccines and a package of gun-control measures. Public health was apparently less important that new taxes.
Worst is what the measure promises for the future. It is not part of the state constitution, so unless opponents gather enough signatures to place it on the ballot, it will be come law and can be amended at will. Were it a proposed constitutional amendment, voters could accept or reject it and any proposed changes to it.
Furthermore, because of the way tax law has been interpreted by the courts, every time lawmakers need more money they’ll go back to the new tax and tinker a bit. Maybe they’ll include groceries and gasoline as taxable items. Perhaps they’ll lower the $1 million threshold above which the tax is imposed. Or they’ll reverse the tiny reduction in income tax rates included in the bill.
You get the idea. If Gov. Brown signs it, though Oregon may not have a sales tax by name, it has one, just the same. And it’s likely to go up.