Oregon Tax Issues to Watch After Measure 97 Defeat

Oregon voters defeated Measure 97 on November 8, which means C corporations in the state don’t face an immediate tax increase.

If passed, the measure would have imposed a 2.5 percent minimum tax on C corporations for Oregon gross receipts exceeding $25 million. It also would have removed the current minimum tax cap of $100,000 per year. Select C corporations were exempt from the measure and would have remained subject to the current tax structure and cap.

Although Measure 97 didn’t pass, Oregon’s budget deficits remain, which means further attempts may be on the horizon to modify the state’s minimum tax structure. As governments with significant deficits seek new sources of revenue, they often turn to taxpayers’ receipts and net income—particularly that of the perennially unpopular, large, out-of-state corporations. These large entities have been the target of past Oregon tax proposals, such as Measures 66 and 67.

Political support may be more widespread for a minimum tax that’s applied to a broader base at a lower rate. Mark Hass, the leader of the Oregon Senate’s revenue committee, proposed a 0.39 percent tax on corporate receipts during the legislature’s 2016 short session last February. His plan didn’t receive a hearing, but Measure 97’s defeat could add urgency to this and other new tax proposals.

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Moss Adams will continue to keep you informed of legislative changes that could impact strategies you may be considering. For more information, contact your Moss Adams professional or email statetax@mossadams.com.