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How Oregon taxes stack up

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Archives - November 2009
Wednesday, October 21, 2009

Oregonians will vote in January on two measures already passed by the Legislature that would increase taxes and raise $733 million over two years. A survey of other states’ taxes shows that while Oregon’s corporate income tax hike is far from radical, other changes make Oregon’s taxes look more extreme.

Corporate income tax: The measures keep the current rate — 6.6% of net income — for the first $250,000, but income over $250,000 will be taxed at 7.9% for the 2009 and 2010 tax years. That marginal rate drops to 7.6% for 2011 and 2012. Starting in 2013, income under $10 million will be taxed at 6.6% and income over $10 million will be taxed at 7.6%.

How’s it stack up? Oregon’s new tax rate is the 20th worst in the nation, according to the Tax Foundation, a nonpartisan nonprofit that collects data on tax policy. New Hampshire has the highest corporate income tax, at 8.5% on sales over $50,000. Fives states including Washington have no “corporate income tax,” but Washington has a tax on gross receipts called the “business and occupation tax” that ranges from .003% to .033%.

Individual income tax: One of the measures added a new bracket for income over $125,000 for individuals and $250,000 for households, to be taxed at 10.8%. Individual income over $250,000 and household income over $500,000 will be taxed at 11%. The 10.8% rate will drop to 9.9% in 2012.

How’s it stack up? The Tax Foundation ranked Oregon’s new personal income tax sixth worst in the nation. New York was worst with seven brackets maxing out at 8.97% on all income over $500,000. Alaska and Washington are two of the seven states with no personal income tax.

Corporate minimum tax: All businesses in Oregon were required to pay the state $10 in years when taxable income was zero or offset by tax credits. If the legislation survives, Oregon will go to a graduated minimum tax for C-corporations with 12 different rates, starting with $150 a year for companies with sales of less than $500,000 and maxing out at $100,000 a year for companies with sales of $100 million or more. The minimum tax for S-corporations and partnerships will be $150.

How’s it stack up? Sixteen states have a flat minimum corporate tax ranging from $10 in Louisiana to $800 in California; New York has a graduated tax that maxes out at $5,000, making Oregon’s new corporate minimum tax the most severe in the nation for companies with revenue in the millions.

Federal deductibility: Oregon’s federal tax deduction is capped at $5,850 for individuals making under $125,000 and households making under $250,000. Now the deduction is capped at graduated levels for individuals in the $125,000 to $145,000 range and households in the $250,000 to $290,000 range. Individuals making $145,000 or more and households making $290,000 or more cannot deduct for federal income tax.

How’s it stack up? Oregon is one of only six states that offer any deduction for federal income tax; only four do not cap the deduction. 

ADRIANNE JEFFRIES
 

Comments   

 
Sharon
0 #1 Resident of State of OregonSharon 2009-11-04 13:13:01
Isn't it time to take a serious look at what Oregon is spending the monies on? Are we (the residents of Oregon) getting something for the money or is some business/organi zation/person prospering because they "advised" some legislature to vote for something not absolutely needed by the state? Priortize. Are there too many state employees that could be used in a department that has too few - are there departments that could be better handled by private businesses - what about reviewing state contracts - are they reasonable, etc....
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