TAX POLICY IMPACT

SPECIAL REPORT

OREGON TAX POLICY: WHERE DO WE GO FROM HERE?

A report by the Technology Association of Oregon  


Sponsored by 

SUMMARY
The purpose of the analysis is to provide the Oregon Governor’s office, state legislators, and key stakeholders with a better understanding of the ways selected peer and competitor states are using tax policy to support growth of their own technology industry ecosystems.

PEER STATES
The 5 states included in the tax policy comparison (WA, AZ, TX, UT, CO) were selected based on TAO’s experience working with companies operating in Oregon or considering relocating to the state.

AT A GLANCE

OREGON TAX LANDSCAPE IS LAGGING ITS PEERS
ROOM FOR IMPROVEMENT
From personal income tax rate to corporate tax rate, Oregon's tax policy is lagging its peers in key areas. Without supportive tax policy Oregon will struggle to attract top companies and startups, which will be naturally drawn to lower cost states.



TAX PARAMETERWACOUTAZTX
Personal Income Tax Ratehigherhigher
higher
higher
higher
Income Tax Burden (Family of 3)higher
higher
higher
higher
higher
Corporate Taxhigher
higher
higher
higher
higher
Sales Factor Sourcing Rulesworse
worse
worse
worse
worse
Throwback/Throwout Rulessamesamesameworse
same
Consolidated Returnsworse
worse
worse
worse
worse
Sales Taxbetterbetter
better
better
better
Local Property Tax (Major City)higher
lowerhigherhigherhigher
Unemployment Insuranceworseworseworseworsesame
Tax Credits - Investorssame
same
worsesamesame
Tax Credits - R&DbetterN/Asimilarworsesimilar
Tax Credits - InvestmentsbetterworseworseN/AN/A


RECOMMENDATIONS

Recommendation #1: Do not enact a sales tax

A KEY COMPETITIVE ADVANTAGE

Recommendation #2: Do not raise personal income tax

OREGON IS 2nd HIGHEST IN U.S.

Recommendation #3: Adopt market sourcing of services

BETTER ALIGN WITH PEERS

Recommendation #4: Extend R&D tax credit

KEEP OREGON INNOVATING

PART ONE: PERSONAL INCOME TAX

KEY TAKEAWAY: “Personal spreadsheets are just as important for business location decisions since the decision-maker is personally affected.”

Oregon has the 2nd highest personal tax rate in the U.S.

AT 9.9% OREGON IS JUST BEHIND CALIFORNIA

Personal income tax impacts tech companies more than other companies

DUE TO HIGHER INCOME WORKERS

Personal income tax accounts for 35.9% of state tax collections

A MAJOR SOURCE OF STATE REVENUE

OREGON RANKS WORST AMONG PEERS

With a ranking of 32, Oregon is the worst among its peers for personal income tax. This hinders Oregon's ability to attract top tech companies.

2017 Tax Foundation State Ranking Share

PART TWO: CORPORATE TAXES

KEY TAKEAWAY: Oregon currently has the highest corporate income tax rate among its peers.

States are increasingly adopting higher rates for out-of-state companies than in-state firms.

MARKET BASED SOURCING RULES

Corporate income taxes account for just 5.4% of state tax revenues.

ACCORDING TO U.S. CENSUS BUREAU

With a top rate of 7.6%, Oregon has the highest rate among peer states.

LOWER RATES FOR COMPANIES GROSSING < $1 MILLION

OREGON IN MIDDLE OF THE PACK

With a ranking of 35, Oregon ranks under WA and TX despite having the highest overall top corporate tax rate.


STATERANKING
TX49
WA48
OR35
AZ19
CO18
UT3