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Dispatches from public radio's correspondent at the Oregon Legislature. This is a venue for political and policy coverage of the state government in Salem and its impact on the people of Oregon.

Oregon Lawmakers Get First Look At 111-Page Corporate Tax Measure

Chris Lehman
Northwest News Network

Oregon lawmakers got their first look Tuesday at a bill to overhaul the way the state taxes corporations. The short version of the plan: Businesses would be taxed on the sales they have in Oregon each year, instead of on their profits.

The 111-page document leaves out some of the details, including how much corporations would actually be taxed under the plan.

"I would just advise everybody to understand that this is just a shell, and that a lot of the language will be updated, replaced…or not," said Sen. Mark Hass, D-Beaverton, who co-chairs the Oregon Legislature's Joint Committee on Tax Reform.

A separate single-page summary of the bill does contain some numbers: The so-called "Commercial Activity Tax" would be a flat $250 fee for businesses with annual sales of less than $3 million per year in Oregon.

For companies above that threshold, the tax rate would vary depending on the type of business they're engaged in. The service industry would be taxed most heavily, at 0.85 percent of annual Oregon sales. Retail stores would be taxed at 0.35 percent, and wholesale firms at 0.25 percent. Businesses that don't fit any of those categories would be taxed at 0.48 percent.

The existing corporate income tax, which is based on profitability, would be scrapped entirely under the plan.

The proposal also contains a small drop in the personal income tax rate for most Oregonians, which would offset potentially higher retail costs if businesses pass along the cost of the new tax to consumers.

Using those numbers, the Legislative Revenue Office estimates the proposal would bring in $954 million during the upcoming two-year budget cycle. That's less than half the amount that would be raised under a plan pitched by Oregon House Democrats earlier in May.

House Speaker Tina Kotek, D-Portland, told reporters at the Capitol Monday that her goal "is to get a long-term solution to our budget problem."

Kotek has previously said that simply raising enough revenue to patch up the existing $1.4 billion budget shortfall is not enough. She wants lawmakers to fund expanded state services, including in the areas of education, health care and human services.