This week my great state of Oregon enacted a couple of tax measures. One of the measures, measure 67, was a much misunderstood tax on corporations, big and small. The pro-tax side marketed the bill in three ways:
- Schools will have to cut days if the tax doesn’t pass
- Businesses only pay $10 minimum tax now, and the minimum tax will only be raised to $150
- 97% of Oregonians will not be affected by these tax measures
I have a problem with hanging the schools over the voters’ heads, when there is a bunch of other government spending that could be cut, but that’s nothing new. Seems it happens every year. Oregonians are used to it, though I would prefer they fund the schools first, instead of funding the pet projects first and leaving school funding for last.
And you’ll get no argument from me that the minimum tax should be raised. However, a big part of this measure was left out of the propaganda. Corporations will now be taxed on their gross revenue, not their profits. So high revenue, low margin businesses (nurseries, grocery stores, fuel companies, etc) that are already struggling will struggle more. And if a corporation loses money? They still have to pay the tax on their gross revenue. I don’t know where the money will come from, but they’ll have to pay it. Oh, and the tax is retroactive, so they owe the tax now, even though they didn’t budget for it in 2009.
The bill was touted as a tax that won’t affect 97% of Oregonians. However, it will affect us all with higher unemployment and higher prices, as corporations will either lay off workers or pass the tax on to the customer through higher prices. An example of the misunderstanding is evident by comments like this one:
I like how they argue that 67 would would ruin Oregon jobs. So you’re telling me that by paying an extra $140 a year, its going to be such a huge burden…the $11 a month increase…that corporations won’t be able to handle it?
Makes me wonder how many people thought they were only voting a $140 increase in taxes for businesses. If it were only $140, the tax never would have been challenged.
For a state that supposedly loves local business and hates the big box stores, we took a huge step backward. The out of state corporations will have no trouble paying the tax. The small and mid-sized local corporations, who are already struggling, will struggle more.
It will be interesting to see how this plays out. I feel for my friends, who are in danger of losing their jobs. I feel for employers, who will have to make some hard decisions. And I feel for the people who voted for this tax, naively thinking it would never affect their bottom line. Oregon just voted in a back door sales tax.
I hope I’m wrong, but fear I’m right.
Enough about taxes…or maybe not. How about a tax roundup?
The Roundup
There were several tax reads in my reader this week. Take a look!
- 2009 Tax Credit & Deduction List – Finance for a Freelance Life
- 3 Reasons Why a Big Income Tax Refund is a Horrible Thing – Bible Money Matters
- How to Avoid a Tax Audit – Moolanomy
- How Will the Obama Middle Class Tax Credits Benefit You? – Wisebread
- How Does the IRS Pick Tax Returns to Audit? – Bargaineering
- Tax Refunds – Not a bad thing – Green Panda Treehouse
I participated in the Festival of Frugality this week.
Enjoy the weekend!
Photo by Seven_Null7.
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{ 5 comments… read them below or add one }
I appreciate the link love! North Carolina raised its sales tax a few months ago as a way to fill the gap.
I’m confused as to why every “tax” is linked to turbotax website- is this some kind of sponsored post?
I thought they were some kind of informative link initially…
What I find amazing is that so many of the people actually believe that the companies are only paying $10 in corporate taxes. It’s a table for them, just like for individuals. If you make X dollars, you pay Y dollars.
KC’s company, although based and licensed in Washington, must pay Oregon business taxes. I won’t give numbers, because I don’t have that right, however, they currently, before the new taxes, pay MUCH more than $10, it is actually a 4 figure number. And now they will have to pay more taxes.
And as an example, that makes a lot of sense. You have a family run dairy farm that is local. They are now going to have to come up with about $150k in taxes, for this year, that wasn’t budgeted for (like Lynnae was pointing out above). Where is that going to come from? Is it likely that they are going to be able to minimze their cost of doing business? Not likely. So what will happen? The prices of the items they sell is going to have to be raised. So that gallon of milk that you are currently buying for $1.98 (if you are lucky) is going to start going up. Will it go up by multiple dollars? Probably not right away, but I know when I bought my milk last night, it was 11 cents more than it had been the week before. Many people have started calling it the “shadow poor tax”, as that is who it is also going to effect. Anyone that purchases the products from those local companies.
I also thought it ‘funny’ that no mention was mad of the $100,000 top tax-to-pay bracket for the big corps, and the next step down of mandatory taxes was $50,000…. those are both a LONG ways away from $140…. but somehow, the propaganda failed to mention them…
Retroactive tax is just bad bad bad…. as is a tax on Gross … even our state rep. up here said taxing on Gross receipts was wrong….
I think it’s a matter of mostly the lower income brackets voting yes thinking they were going to “get” the higher income brackets… and as we know here in OR, there are more lower income brackets than higher…. and it’s a case of anyone with a vote, working or not, gets to vote to tax the most productive income producers as a punishment…… never thinking that it is going to turn around and bite the lower income brackets the most with the raises in groceries and services and more lost jobs. Funny how that works….
The other big segment here was the unions voting yes… schools and government mostly…. to keep their raises in tact etc… And we all know how big a percentage they are also in Oregon…. too much …. oh, don’t get me going on this one!
Keep taxing the producers and they’ll eventually give up or move elsewhere….. then where will all the takers get their grub from?
Sooooo short sighted…. There is NO incentive for people to try to make more money when they are going to lose it to taxes anyway…
The company I work for will be cutting back…. no new hires, and the retiree spots will not be filled til we creep out from under this retro active tax ‘surprise!”……. what a mess! AND>>>> our rates WILL be going up…. and as we are in TRUCKING….the costs of things we haul will go up… pass thrus, ya know!
Most everything is hauled by trucks…. especially gas and groceries!
I definitely agree with you….. here comes the next recession all over again here in Oregon….. and it will be WORSE than the one we just came thru! And sadly, self-inflicted….
Tragically, people do not generally understand how money or taxes work. They just blindly believe the snippets of information that they get in digestible soundbytes and don’t bother to get accurate and comprehensive information before they go to vote. Furthermore, people have a blaise “It isn’t me; so what does it matter?” attitude. What they don’t understand is that taxing businesses further causes job loss and price increases, thus affecting them in the long run, causing a downturn in the local economy.