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This is RichardK back again to clairify my previous post and to add some more information. 

The expected revenues compared to the total did not account for two years budgeting and an allowance for profitable corporations avoiding the minimum tax.  Analysis by the Oregon Center for Public Policy indicates that 5,136 profitable corporations paid the minimum tax with 4,900 of these using carry forward losses and 216 using credits.  Subtracting 5,136 from 20,803 would leave 15,647 C corporations  paying the $150 minimum annually for a total of about $2 million without adjusting for C corporations being taken out of the $150 minimum by the $500,000 sales threshold.  54,419 S corporations at $150 would equal about $8 million annually and $7 million from partnerships would bring the total to about $17 million, or about $34 million for the 2009-11 budget.

The most likely reason for C corporations paying the minimum tax is that they can deduct compensation to corporate owner-officers who declare the income from their corporations on their personal returns like owners of S corporations.    Oregon Department of Revenue statistics break down the C corporations paying the minimum tax by 20 sectors and they all show most of them payiing the minimum tax.  Besides the largest 275 corporations who are less than 1% of 33,130 total C Corporations, but paid 65 percent of the total excise tax, 3% of the total paid 85%, and 4% paid 91% of the total excise tax.  The top 4% of C corporations were in the taxable income range starting at $500,000 per year.  This is a total of 1,443 returns.  Therefore, it is not likely many "big" corporations paid the minimum $10 tax.

Measure 67 expected to raise $255 million for the 2009-11 budget, leaving at least about $221 million to come from a minimum excise tax on gross sales over $500,000, an increase on corporation taxable income over $250,000, doubling the annual report fee to $100, and other fees. 

posted 3 years, 4 months ago
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I am voting no on Measure 67 and here is my reason.  The campaign is based on massive deception.

Voters are being given a sales pitch which sounds very good and a lot of well-meaning groups have endorsed it.  The main theme is that the $10 minimum excise tax is outmoded and big corporations are avoiding taxes by paying the $10 minimum, but no one is apparently checking the numbers.  I went to the Oregon Department of Revenue for more information.

If you check out the numbers you will find the impact of the $10 minimum tax is small compared to what this measure is about. 

As of 2006, the most recent figures, there were 54,419 S corporations and  20,803 C corporations paying the minimum tax, with the largest 275 C corporations paying 65 percent of the total excise tax.  A total of 75,222 returns paying the minimum tax times $150  equals about $11 million.  Measure 67 is expected to raise $255 million, so where is the other $244 million coming from?

Besides S corporations and C corporations, Measure 67 is targeting LLCs and partnerships.  LLCs already file either as a C corporation or an S corporation.  Partnerships previously did not have to pay excise tax due to the partners paying taxes on their personal returns.  S corporations function the same way as "pass-thru" entities.

As of 2006, there were approximately 49,000 partnership filers.   Multiplying 49,000 times $150 equals about $7 million.  Measure 67 also would double the corporation annual report fee from $50 to $100.  There were a total of 87,901 of S and C corporations and multiplying by $50 would raise about another $4 million.

So, if you add up $11 million from the minimum tax, $7 million from partnerships, and $4 million from the annual report increase you have a total of approximately $22 million.  It would probably be less due to the $500,000 gross sales factor reducing the number of minimum tax payments.  This leaves at least about $230 million to be obtained from a sales tax on C corporation gross income over $500,000.  A sales tax starting at $500,000 annual sales reaches down to small and medium-sized corporations, not just the "big" corporations.

Bottom line is that since most of the money proposed to be raised by Measure 67 is by a sales tax, a main selling point based on the $10 minimum tax is deceptive advertising pure and simple. 

posted 3 years, 5 months ago
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