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It's time to end Oregon’s "corporate tax dodge"

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Monday, May 01, 2006

Bill Thorndike of Medford Fabrication challenged the business community, saying, “It’s time we start giving more to schools than lip service or the random auction item, and start putting our money where our mouths are” [Time to step up, FIRST PERSON, March]. I couldn’t agree more. Thorndike’s solution, though, won’t cut it.

While facilitating an increased involvement by parents is necessary for a better education system, it is not sufficient. There is an equally critical role for Oregon’s business community that Oregonians must not overlook: Corporate Oregon needs to share fairly in financing public services. We cannot volunteer our way out of what is fundamentally a flawed financing structure for vital public services.

What Oregon schools need is a business community that is willing to pay its fair share of the cost of providing the basic public services it relies upon every day. Corporate Oregon needs to stop dodging its responsibility.

Over the last 25 years, Oregon’s corporate income tax has plummeted both as a share of the state economy and as a share of all income taxes paid in Oregon. Today, corporations operating in Oregon are paying about 71% less in state corporate income taxes as a share of the economy than they did in the late 1970s and are paying about 6% of income taxes compared to about 18% in the mid-1970s.

If corporate income taxpayers still paid the same share of income taxes they paid in 1973-75, state revenue would be about $1.8 billion higher this budget period. With K-12 education getting about 43% of the state general fund and lottery dollars, Oregon’s schools are losing out on at least $774 million in this budget cycle alone.

The long-term decline in corporate in-come taxes has occurred because corporations have won a number of tax breaks, and because corporations have grown aggressive about employing abusive tax shelters. A new tax break for companies with few Oregon sales but significant property and payroll in Oregon will cost Oregon over $70 million this budget period and will keep Oregon corporate income tax collections relatively flat for the rest of this decade.

Thorndike and other business leaders should not allow corporate Oregon to continue to avoid its commitment to quality public education. It is time for corporate Oregon to step up and do its part to improve education by picking up its fair share of Oregon’s income taxes and ending the outrageous corporate tax dodge.

— Chuck Sheketoff
Oregon Center for Public Policy

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