Following the Election Day defeat of Measure 97, supporters of the plan are once again seeking the enactment of a gross receipts tax in Oregon. Despite some changes, the tax proposal could still lead to tax pyramiding and higher prices for consumers.
Tax Foundation Economist Nicole Kaeding analyzes the updated proposal in a new blog post:
Our Oregon representatives said that tax pyramiding wouldn’t occur under this new proposal, because it was limited to firms with $100 million in Oregon-based sales. That is a bold assumption. That would only be true if those firms only sold final goods directly to consumers. If their goods were inputs into other products, tax pyramiding could still occur, leading to higher costs for consumers.
According to the most recent data from the Oregon Department of Revenue, 273 C corporations had sales greater than $100 million in 2013. Given that the new proposal includes pass-through businesses, the number of affected businesses is likely higher than 273. It’s highly unlikely that all of these firms sell directly to consumers, meaning that tax pyramiding is still a real concern.
After losing by 19 points in November on Measure 97, Our Oregon is back at it, proposing another gross receipts tax. As the state looks to close its large budget deficit, this proposal would be the wrong approach to close the hole.
