This is part two of a four-part series discussing Measure 97 and recent analysis from the Oregon Legislative Revenue Office. Read parts one, three, and four.
If adopted by voters in November, Measure 97 (M97) would enact a gross receipts taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. in the state, costing each Oregon resident $600 per year.
As noted in our last post in this series, corporations will have the legal incidence of the tax, but Oregon residents will bear the economic costs of the tax increase. The Legislative Revenue Office (LRO) has recently released estimates of the increase in tax burdens for Oregonians, both as a percent of personal income and on a per capita basis.
Here’s a breakdown:
- In fiscal year 2013, the state-local tax burden in Oregon was $3,909 per capita, or 28th highest nationally. If M97 had been in place in fiscal year 2013, the state-local tax burden would have been $4,501, 20th highest nationally.
- As a percent of personal income, Oregon’s state-local tax burden would have increased from 10.1 percent to 11.6 percent, a move from 26th highest to 9th highest nationally.
- Under either calculation M97 would represent a substantial increase in the state’s tax burdens on residents. The first calculation finds that individuals would pay an average of $600 more per year in taxes, while the second calculation finds that an additional 1.5 percent of personal income would go towards state and local taxes if M97 is adopted.
The large increase in tax burdens is because of the immense size of M97. According to the LRO, M97 would increase taxes by a total of $6 billion per biennium. The chart below summarizes the annual revenue produced from M97 if it is adopted:
|
Revenue Impact Estimates (Millions of Dollars) |
|||||||
|
Fiscal Year |
2016-2017 |
2017-2018 |
2018-2019 |
2019-2020 |
2020-2021 |
2021-2022 |
2022-2023 |
|
Net Revenue Impact |
$548 |
$3,028 |
$3,071 |
$3,117 |
$2,886 |
$2,976 |
$3,110 |
|
Biennium |
2015-2017 |
2017-2019 |
2019-2021 |
2021-2023 |
|||
|
$548 |
$6,099 |
$6,002 |
$6,086 |
The LRO states that “IP 28 would increase total state taxes by approximately 25% and combined state and local taxes by about 15%.”
The LRO doesn’t state this, but we’ve pulled the historical revenue information, and that means that M97 would be the largest state tax increase in Oregon’s history. Tax changes of this magnitude are not common in Oregon or other states, and Oregon’s last large tax increase, Measures 66 & 67, was projected to raise taxes by $727 million, or approximately 6 percent of general revenue, for the 2009-2011 biennium. M97 would be more than eight times that size.
Be sure to read the other three installments in our four-part series on Oregon’s gross receipts taxA gross receipts tax, also known as a turnover tax, is applied to a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation. Unlike a sales tax, a gross receipts tax is assessed on businesses and apply to business-to-business transactions in addition to final consumer purchases, leading to tax pyramiding. initiative:
Oregon’s Gross Receipts Tax Proposal Would Increase Consumer Prices
Oregon’s Gross Receipts Tax Proposal Would Hurt Job Creation
Oregon’s Gross Receipts Tax Would Be Regressive