Business tax vote may be a liberal test case

Oregon voters in November will consider the largest U.S. corporate tax increase in this millennium, a decision that may make the state a proving ground for the liberal belief that businesses are getting a free ride.

The measure would levy a 2.5 percent tax on in-state gross sales of more than $25 million. It would swell Oregon’s budget 33 percent and steer $3 billion of corporate earnings annually toward schools, health care and the elderly, making it something of a Pacific Northwest welfare state.

The state would join Kansas in experimenting with wealth redistribution on a grand scale: In 2012, Republican Gov. Sam Brownback approved broad tax and spending cuts as part of a selfdescribed tea party experiment that so far has failed to boost the economy.

And Oregon’s proposal comes to voters as the issue of income inequality is being amplified nationally in the presidential race.

Pushed by the wellfunded labor union for school teachers, the proposal would increase the state’s taxes by 25 percent. Proponents say Oregon’s public schools, ranked 39th in the nation in quality by Education Week, have been shortchanged for decades while corporations enjoy some of the nation’s lowest business taxes.

“There is a basic unfairness in our tax system that makes working families pay an increasing share for state and local services, including public schools, senior services and health care,” Gov. Kate Brown, a Democrat, said in a statement. “By some measures, Oregon is among the lowest in corporate taxes, and Oregonians expect everyone to pay their fair share.”

Opponents, who have raised $9.3 million to fend off the initiative, say it will dampen the state’s thriving economy, one of the nation’s best performing. Oregon’s non-partisan Legislative Revenue Office concluded companies would pass the cost onto consumers, saying it would “largely act as a consumption tax.”

Under the measure, a company with sales in the state of $350 million or more would see its tax bill go from $100,000 a year to $8 million annually.

A poll released Sept. 8 by DHM Research found that six out of 10 Oregonians support the ballot measure. Still, about half of registered voters in the same survey said Oregon should keep taxes and spending at their current level.