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The Economic Effects of M97

2 min readBy: Nicole Kaeding

Oregon’s Legislative Revenue Office (LRO) released its much-anticipated report today on Measure 97 (M97). If adopted in November, M97 would raise the state’s minimum 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. on large corporations to 2.5 percent of all Oregon-based sales in excess of $25 million.

More analysis from us will come, but a quick note that LRO’s analysis illustrates just how large the tax increase would be. LRO revised upwards its initial estimate of the revenue produced, from $5 billion to $6 billion per biennium. All told, this is a 25 percent increase in state tax revenue. The report also evaluates how Oregonians would be affected. Individuals would face higher tax burdens, higher costs, and lower after-tax incomeAfter-tax income is the net amount of income available to invest, save, or consume after federal, state, and withholding taxes have been applied—your disposable income. Companies and, to a lesser extent, individuals, make economic decisions in light of how they can best maximize their earnings. .

State and local per capita taxes would increase by $600. In other terms, an individual’s state-local tax burden would increase from 10.1 percent of personal income to 11.6 percent of personal income. This would rank Oregon 9th in the nation. LRO found that the higher tax burden would be regressive too. After-tax household income would fall for all household groups, but the largest effect would be for households with less than $48,000 in income. Those households would see personal income fall by 0.9%. The table below shows the projected effects for each household group:

After-Tax Household Income

Income Group

Change from Baseline

Percent Change from Baseline

Less than $21,000



$21,000 to $34,000



$34,000 to $48,000



$48,000 to $68,000



$68,000 to $103,000



$103,000 to $137,000



$137,000 to $206,000



Greater than $206,000



Consumers would bear much of the cost of the tax increase. LRO estimated that prices would increase by 1 percent, due to the tax pyramidingTax pyramiding occurs when the same final good or service is taxed multiple times along the production process. This yields vastly different effective tax rates depending on the length of the supply chain and disproportionately harms low-margin firms. Gross receipts taxes are a prime example of tax pyramiding in action. effects of a 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. .

In addition to higher prices and higher tax burdens, individuals would have fewer job opportunities. LRO predicts that 38,400 private sector jobs will be lost due to M97. Retail trade and wholesale trade would be the most affected. These two industries would lose 4.9 and 4.6 percent of their workforce respectively. Health services, manufacturing, and natural resources would also be particularly hard-hit. There would be more public sector jobs due to the tremendous amount of new revenue for the state, but on net, the state would lose 20,400 jobs, or 0.75 percent of all jobs.

Much of the debate in Oregon has focused on the hypothetical effects of M97. With this new LRO report, detailed effects are becoming clearer.

For more information on M97, click here.

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