As our state faces a $1.6 billion budget shortfall, lawmakers are considering a number of ways to raise taxes to bridge the gap. One current proposal asks Oregonians to reconsider Measure 50, their 1990s-era property tax revolt. Senate Joint Resolution 3 (SJR3) – would amend Oregon's Constitution and do away with Measure 50. Property taxes would be based on real market values instead of the formulaic "Assessed Values" we have now.
I was recently part of a group that met with Sen. Mark Hass, D-Beaverton, who chairs the Senate Revenue Committee. He believes that property tax reform (SJR3) is unlikely to get much traction this session. Instead, the Senate Revenue Committee will propose a Corporate Activity Tax ("CAT"), a gross receipts tax modeled after Ohio's CAT.
The precise details are still being discussed. But, unlike Ballot Measure 97 (which would have charged a 2.5 percent tax on gross annual sales above $25 million) the new "Corporate Activity Tax" will have a tax rate of 0.4% to 0.7% on Oregon business sales above $1 million. The Corporate Activity Tax would replace the state's existing corporate income tax and – because it will have a much broader tax base – might also lower some personal income taxes.
Instead, the legislature should focus on fixing the problems with our property tax system. Repeal isn't the only solution. Relevant, necessary reform can be more meaningful. I will be discussing some reform possibilities in my next few posts. Stay tuned.