Repeal of Oregon Tax Increases Would Improve State Business Tax Climate

January 7, 2010

A new Tax Foundation Fiscal Fact takes a look at how Oregon’s upcoming referendum to repeal individual and corporate income tax increases enacted last year would affect its 2010 State Business Tax Climate Index ranking. The January 26 referendum would repeal Measure 66, which includes two new individual income tax brackets (with rates at 10.8 percent and 11 percent), and Measure 67, which replaces the state’s previous flat corporate income tax with a bracketed system and a top rate of 7.9 percent.

If Oregon voters decide to reject income and corporate tax increases passed by the legislature in 2009, the state would move back into the top 10 in the State Business Tax Climate Index.

Table 2
Oregon’s State Business Tax Climate Index Rankings under Different Referendum Outcomes

Referendum Outcome

Ranking

1. Both tax increases are enacted

14th

2. The individual income tax is rejected but the corporate income tax is enacted

9th

3. The individual income tax is enacted but the corporate income tax is rejected

13th

4. Both tax increases are rejected

8th

Rankings are out of 50 states. The higher the rank, the more business friendly the tax climate.

Source: Tax Foundation

If both measures are upheld by voters, Oregon’s State Business Tax Climate Index ranking would remain where it is at 14th. If the individual income tax is rejected but the corporate income tax is enacted, the state’s ranking would improve to 9th. If the individual income tax is enacted but the corporate income tax is rejected, the state’s ranking would improve one spot to 13th. If both measures are rejected, the state’s ranking would improve to 8th.

For more, see Tax Foundation Fiscal Fact No. 206, “Oregon Referendum Could Reinstate Higher Income Tax Rates.”


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