Oregon voters will decide the fate of five statewide ballot measures this November, including Measure 118. Also known as the “Oregon Rebate,” it would impose a 3% tax on a company’s sales above $25 million in Oregon. That money would then be distributed evenly to every Oregonian — roughly $1,600 per person — regardless of age or income, starting in 2026 as either direct payments or tax credits.
Proponents of Measure 118 claim that it would slash child poverty in the state by half while making large corporations pay “their fair share” in taxes. Opposition to the measure is being led by the No on Measure 118 campaign, which argues that it would make the state less attractive for businesses and lead to higher prices for consumers. A recent analysis prepared by the Legislative Revenue Office has also raised concerns that the measure could have a negative effect on revenue the state relies on to pay for education and other services.
Joining us for a debate about Measure 118 is Stacey Rutland, an adviser to the Oregon Rebate campaign, and Angela Wilhelms, president and CEO of Oregon Business & Industry.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Should companies with Oregon sales above $25 million a year pay more in taxes, with the resulting money being evenly distributed to every Oregonian? That’s the central question of a ballot measure – Ballot Measure 118 – that would impose a 3% tax on a company’s Oregon sales above $25 million. A state analysis found that it would mean that every Oregonian regardless of age or income, would then get about $1,600 every year, starting in 2026, either as a direct payment or as a tax credit.
Proponents say this would mean that large corporations would pay their fair share in taxes. Opponents say it would lead to higher prices for consumers and take money out of state coffers. We’re going to hear from both sides right now. Stacey Rutland is an advisor to the “Yes” side. Angela Wilhelms is the president and CEO of Oregon Business & Industry, and is on the “No” side. They both join me. It’s great to have both of you here.
Angela Wilhelms: Thank you for having us.
Stacey Rutland: Thank you.
Miller: Stacey, first – I mentioned the basics of how this would work. Why put this measure forward?
Rutland: Right now, we know that 44% of all Oregonians can’t cover their basic monthly costs. We also know that a large portion, when polled, 67% of Oregonians don’t believe the American dream is possible anymore – of owning a home, having a good job, going to college. So we know, right now, that we are in a position as Oregonians where we are struggling, and where the idea of prosperity and thriving is becoming more and more difficult.
We also know that corporations consistently – we hear it all the time, in every election year – are not paying their fair share in taxes. So, we feel that right now it’s a really important opportunity and moment for Oregonians to be able to take control and take voting rights into their own hands, to be able to right the wrongs that have happened across our state and also our country for the last many years.
Miller: Angela, we’re going to talk in just a second, and deeply about the specifics here, about what this would mean. But I’m curious about your take on the last thing that we just heard from Stacey, that the largest corporations are not paying their fair share. Before we get to your take on why you think this solution is a bad one – what do you think about that premise?
Wilhelms: Well, I think it’s important to keep in mind when we’re talking about that in the context of this measure, that this is a tax on sales. This isn’t a tax …
Miller: No, no, no, but that wasn’t ...
Wilhelms: Well, I know, but I …
Miller: OK, but I feel like you’re getting into what I do want to get to, about what you don’t like about this measure. I’m saying, what do you think about what’s behind it? The proposition that businesses are not paying their fair share? We’ll talk about the details of Measure 118 in just a second.
Wilhelms: It’s important to keep in mind a couple of things. Oregon just received an “F” from CNBC for business friendliness in their annual [America’s] Top States for Business. We dropped seven places overall, to 28th, as a good place to do business, being business friendly. Oregon companies, and companies that do business in Oregon, do pay an extraordinary amount in taxes into the system. They pay income taxes, they pay property taxes, they pay fees of all sorts to do the business that they do. They pay local taxes, state taxes, federal taxes.
So I don’t know what numbers they’re using to talk about this concept, but companies have always been happy to pay their responsibility into the system. In fact, just a few years ago, the state enacted the Corporate Activity Tax, which is directly focused on corporate activity in the state of Oregon. The business community didn’t refer that, they’re paying into that …
Miller: And you fought it mightily, in terms of lobbying.
Wilhelms: Some organizations did, and some did not. But, it’s in effect and it’s now funding education services.
Rutland: Could I just pop in?
Miller: Please do.
Rutland: To reference the numbers, to be able to pull in here to the conversation, the numbers that we’re referencing are that right now, 67% of the Oregon General Fund is paid by everyday taxpayers. Only 14% is paid by corporations. This idea of having to pay multiple taxes – Oregonians pay multiple taxes: income, property, gas taxes, the tax on top of a tax. We all understand that. All taxpayers have to cover all of the different taxes based on what our different revenues and incomes are. But I really want to just make sure that it’s clear to everybody right now, for our entire state budget, only 14% of that budget is paid by corporate taxes.
Wilhelms: That’s actually not true. The state budget is much larger than just the general fund, and the businesses pay … not only do businesses pay about 40% of total taxes in the state of Oregon, they also employ 1.7 million individuals across the state, who in turn are able to pay income taxes because of the jobs that those private sector employers provide.
Miller: I’m glad that you both played along with starting here, because it’s important just as a philosophical grounding of the ideas behind this. Now, let’s turn to Measure 118 itself.
Stacey, one of the arguments that opponents have made is that if a company has, say, $50 million in sales, but also $50 million in expenses, they would have to pay this, that there’s something unfair about having this be based not on profit but on gross receipts. Why structure the tax this way?
Rutland: What we found … and what we’ve seen and heard consistently when we hear this idea or statistic that many corporations aren’t paying their fair share in taxes, that’s really based on the idea of corporate profits. And what we know right now is that through loopholes and a range of different tactics, that corporations are able to bring their profit margins down on paper and be able to get away with not paying the taxes that they should.
When we talk about this idea of taxing revenue, I think it’s really important. The state itself released a report and said that less than 2% of all corporations doing any kind of business here in Oregon would actually be impacted by this. We’re talking about 1,500 corporations out of almost 100,000 …
Wilhelms: 2,400.
Rutland: So it’s very, very small ...
Miller: Sorry, that’s a big difference. Stacey, you’re saying 1,500 corporations that do business total in the state of Oregon would be affected. Angela, you’re saying 2,400.
Wilhelms: Yeah, the legislative Revenue Office report clearly stated 2,401, to be precise.
Rutland: Apologies …1,500 C Corps. If you throw S Corps in, which tend to be smaller …
Miller: So, 2,400 total entities that do business in Oregon would be affected. And you’re saying that that’s a relatively low number?
Rutland: Right. It’s around the 2% mark of all corporations doing business in our state. It’s worth noting that those corporations … A lot of our opposition is talking about the idea that this is gonna make corporations want to leave the state. Because these are based on revenue, you do not have to be based in this state in order to have to pay the tax. Comcast, Kroger, Walmart – these are corporations that are not based in our state and they right now are making significant profits off of Oregonians and taking those profits, and that revenue and taking it out of the state.
Miller: Angela, when the related but different Corporate Activity Tax was put in place in 2018 … at that time, there were doomsday scenarios that this is going to lead to a mass exodus of businesses operating in the state. And we have heard in the years since, business owners absolutely saying,“This has been a challenge for us.” But, why should we believe that this would lead to a mass exodus?
Wilhelms: First of all, we’ve never actually claimed that there would be a mass exodus of businesses leaving. I think what the proponents like to do is really oversimplify the economic conversation here. You’re gonna have a lot of different outcomes. There are businesses that will close and will leave. I have heard that directly from business owners. Importantly, it’s not just businesses that are gonna pay this tax directly.
Many, many businesses of a smaller nature are going to be affected by this indirectly because of the price increases and overall economic effects that they’re going to have to absorb. So they might close. Businesses will raise prices at a time when Oregonians can least afford it, And you will have some that choose to sell, or simply exit the state. There is no one outcome that’s going to result from this, but all of those are bad for Oregon’s economy.
Miller: I do want to turn to this question of the tax being passed on to consumers. Stacey, what’s your response, broadly, to that argument – that this simply would be an increase in cost for people at grocery stores, or paying insurance, or whatever? We pay for a lot of different things that would be affected by this tax.
Rutland: The State Legislative Revenue Office did a report on this and crunched a lot of the numbers. They came up with somewhere around a 2% increase in costs over five years.
Miller: I actually thought it was a 1.3% increase by the year 2030.
Rutland: So, incrementally, over the first five years of implementation, that it would reach that. But if you divide that between the five years, knowing that it’s a smaller percentage getting you up to that, then it’s a much smaller number. Now, even if you were to crunch numbers that are higher than that, what we found as we’ve looked at the numbers is that, for your average family of four, for instance, or family of five – the Legislative Revenue Office did two-and-a-half people per household when they were crunching some of the numbers – they identified that for a family of five, they would pay about $800 every year in additional costs.
But that same family of five would be getting far more than that. They would take home more than $6,000. So recognizing and understanding that, if inflation is part of this … and we do question whether or not those inflation numbers are accurate just knowing that the money that’s going out to folks, that’s $7 billion that are gonna be reintegrated into local economies and state economies. There’s a clear net positive that everyday Oregonians are going to experience.
I also just want to point out that inflation has been happening. Exorbitant inflation has been happening. Organizations and corporations like Kroger and others are getting caught price gouging during the pandemic. And there has been no support for everyday Oregonians to help combat those inflationary prices. So the inflation is happening regardless. And we know that there’s a lot of fear and anxiety within Oregonians because of this. But we want to make sure that that fear is not making it so that voters are not understanding when to vote for their own best interests,
Miller: Angela, I’d like to hear your take on the question of being passed on to consumers.
Wilhelms: Voters and Oregonians are very afraid of inflation. In fact, it costs $11,000 more today to buy the same goods and services a family would have bought just three years ago, in 2021. The Legislative Revenue Office did have that inflationary impact. And what that report doesn’t fully measure yet is the compounding effect that happens when a gross receipts tax is taxed throughout the supply chain. That was sort of on the base [Oregon] Tax Incidence Model. That’s the OTIM system that they used. So it doesn’t fully get into this compounding supply chain effect.
But the other thing that gets totally lost in the oversimplification of this conversation is the effect on … take a small local restaurant. Everything they purchase, from food to beverages to health insurance for their employees to internet service, etc, etc., is gonna cost more. And therefore they’re going to have to raise menu prices far more than that base inflationary number. Oregonians know there’s no such thing as free money. It doesn’t just, “poof,” come out of nowhere. They’re going to pay for this and they know it
Miller: Stacey, the Legislative Revenue Office estimated that this measure would erase more than half a billion dollars of revenue in the first biennium, and then over $2 billion in the following biennium – money that could otherwise go to schools, or social services, or anything the state spends its money on. Do you think that’s a good trade off?
Rutland: We don’t see that that’s actually how this legislation is written or its intention.
Miller: You disagree with the analysis.
Rutland: Absolutely. It is designed and intended to be budget neutral. So, from our perspective, every dollar that would normally be going into our general fund would continue to go into the general fund. And what would be re-dispersed after, is taking off administrative costs for disbursement, and whatever is left is what gets distributed.
Wilhelms: So, if that’s the case, then your numbers are all wrong, because the estimates of what the rebate would be don’t take that into effect yet. But the point is the proponents like to pick and choose the facts from that LRO Report that best suit their story.
It is widely accepted by the governor, by legislative budget writers, by legislative revenue, legislative council, by labor unions, by other organizations, that money will come out of the general fund, to the tune of billions of dollars. And whatever intention or hope people may have had when they wrote this measure doesn’t matter. The language on the page is what matters, and the language causes a multibillion dollar budget deficit.
Miller: Angela Wilhelms and Stacey Rutland. Thank you very much, both of you.
Wilhelms / Rutland: Thank you.
Miller: Angela Wilhelms is president and CEO of Oregon Business and Industry, urging Oregonians to vote “No” on Measure 118. Stacey Rutland is an advisor for the Oregon Rebate Campaign, saying, “Oregonians, please vote ‘Yes’ on this.”
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