The Latest in LetterGate: Tax Measures’ Negligible Impact on Farms
Chuck Sheketoff
The plot in LetterGate, the effort by the big-corporate-funded campaign to scare and confuse Oregon voters, is getting thicker than churned butterfat.
It began with a letter tobacco- and beer-industry lobbyist Mark Nelson mailed to households in the state with a return address from an abandoned BedMart store in Salem. In that letter, Carol Marie Leuthold of Tillamook claimed that her dairy business would be hurt by Measures 66 and 67.
Jeff Mapes of The Oregonian reported that the Leutholds dairy farm is a limited liability company (LLC) that will pay only $150 a year in taxes — probably less than a one-night hotel and dinner tab on the globetrotting Leutholds’ trips to Europe for cooking lessons and South Africa for safaris.
Next, we learned from Mapes that the letters weren’t all personally signed by Leuthold, and later we got to see pictures of some of the fake signatures.
Then, the June profile in the Tillamook County Creamery Association website, displaying photos of the Leutholds’ globetrotting vacations, went missing. (Good thing I’ve got a copy of the webpage (PDF)). In its place is a link to a letter explaining that Carol Marie Leuthold's family asked that the webpage be removed, in which we learn that Carol Marie’s mostly individually forged letters were sent to 950,000 Oregon households. (PDF copy here.)
But that's just a sideshow when compared to the main story in LetterGate: Lobbyists for big corporations using misinformation to scare Oregon voters, particularly farmers and other small businesses.
When you look at the data, it turns out that 85 percent of farms in the state will not see their business taxes increase one penny. Of the remaining farms, not many will pay more than $150 a year.
Here are the numbers, based on the latest Census of Agriculture data (2007):
In 2007 there were 38,553 farms in Oregon.
Of those, 32,793 — 85.1 percent of all farms — were sole proprietorship farms. These will pay no new tax under Measure 67 (see OCPP flowchart on Measure 67. a PDF).
Of the remaining farms, 2,907 (7.5 percent) were “partnership” farms. As such, they will pay a flat $150 under Measure 67.
That leaves just 2,507 (or 6.5 percent) defined as “corporations” and 346 (0.9 percent) defined as “Other – cooperative, estate or trust, institutional, etc."
It is hard to say what the coops will pay -- it depends on how they structure their sales. So I really can't say what the 345 "other" would pay. It should be noted that only 15 of them had sales in excess of $500,000 and only 5 had sales over $1 million.
In the absence of corporate disclosure, we can’t know which of the corporate farms are S-corporations — those which pass profits to shareholders and would pay just $150 under Measure 67 — and which are C-corporations.
So, with the vast majority (about of farms paying nothing or $150, how many corporate farms would pay more than $150 directly as a result of Measure 67? We can’t be certain. But there are only two ways that can happen, and it can only happen to C-corporations, not the corporate farms that are S-corps:
First, it could be a C-corporation with Oregon sales below $500,000 that has to pay more through Measure 67’s higher tax rate on its profits. But for that to be the case, the farm would have to have Oregon taxable income in excess of $250,000 – an unlikely hefty profit margin on less than $500,000 in sales for farms or and many other industries.
Second, it could be a C-corporation with sales greater than $500,000. Some of these corporations would pay income tax in excess of $150 based on profits (less tax credits), and the others would pay more than $150 based on the new minimum tax sliding scale.
We know from the Census of Agriculture that only 719 Oregon corporate farms (28.7 percent of Oregon corporate farms) had sales in excess of $500,000. So it’s really out of that universe of 719 corporate farms with sales in excess of $500,000 (just 1.9 percent of all farms in the state) where we’re likely to find farms that could pay a minimum tax in excess of $150 because of Measure 67.
But it is not likely that all of the 719 would pay more than $150. Here’s why:
Some of those 719 corporate farms are bound to be S-corporations, which would pay a flat $150 under Measure 67, no matter how many sales they have.
In addition, the minimum tax sliding scale is based on “Oregon sales,” and much of Oregon’s agricultural production is sold outside of the state. So, some of those 719 farms are C-corps with Oregon sales below $500,000.
The bottom line: fewer than 719 corporate farms out of more than 38,000 farms in Oregon – less than 1.9 percent of all farms – are C-corporations that might pay more than $150 under Measure 67.
But what about all those farmers who pay taxes on their businesses through the personal income tax? Will many farmers be paying increased personal income taxes from the pass-through entities (proprietorships, LLCs, LLPs, partnerships and S-corps)? The Legislative Revenue Office analysis shows that only about three out of every 100 taxpayers will see their taxes go up as a result of Measure 66.
Some of those three out of 100 may be farmers, but I would be surprised if many farmers running farms that are pass-through entities have household taxable income of $250,000 or more like Carol Marie and Dan Leuthold. I imagine we’d find more lawyers, doctors and corporate executives than farmers among the 38,000 Oregonians who will see their taxes go up this year under Measure 66.
Voting “yes” on Measures 66 and 67 should be an easy choice for farmers.
Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org
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connect with blueoregon
Dec 4, '09
I swear you're going to talk this into the ground until your base votes against this one.
At least delete the climate change deniers when they show up!
Dec 4, '09
Chuck: Why is the timber industry pouring so much money into fighting these taxes? Lots of high individual earners? Or profitable C corps? Or both?
Also, saw from Orestar that Phillip H. Knight kicked in 50K to the fight the measures. I'm guessing he could afford to pay a bit more.
Dec 4, '09
Well, from the supply to the demand side of the equation...
I'm as conservative as they come, and I'm voting for it. Why? All those extremely conservative middle management folks that will be pocketing this money.
You all have been most helpful. Love the bits about "x $ goes to each student...". Very, very helpful to my friends that want yearly pay increases that you haven't split out that a big chunk of every dollar, going to "schools" never gets to the kids.
It's only fair. Liberals can't be trusted to give middle managment an equivalent career to what they'd have in the private sector. Fortunately those that the top do, and being a Director in the schools system is one very nice job.
Let's keep it that way. Vote "yes" on M66/67!
7:12 p.m.
Dec 4, '09
Gee Paul, when the Legislature increased K-12 funding for schools, my kids' classes got smaller, more teachers were hired, and more classes that had been cut (like Kindergarten) were offered. I'm sure administrators and district personnel got some of it too, and to the extent that any of that is excessive...OK. But if your intent is to suggest that increasing/maintaining funding in state education has no real-world impact on students, may I say politely that you are totally full of shit?
Dec 4, '09
But if your intent is to suggest that increasing/maintaining funding in state education has no real-world impact on students,
As defined by what? Give me some concrete, tangible statistics that show any improvement that resulted from any increase in spending.
Dec 4, '09
I only know two schools middle managers. They're married. After the last measure, they decided to take another trip to China and pick up a baby, so some good does come to kids, even when $$ go to middle management!
I was less impressed at how, after both took leave time, she quit (and bought a bigger SUV).
No Child tried to establish criteria. That could have worked if Shrub had a clue. Surprised Dems haven't used "No Child Left a Dime", on this, yet!
8:08 p.m.
Dec 4, '09
"As defined by what?"
As defined by what I just described--class sizes, course offerings, key support staff. Surely you're not asking for a full dissertation on the research that leads people to seek smaller class sizes, a wide variety of subjects, and auxillary, targeted support (like reading specialists) for their children?
Dec 4, '09
"You all have been most helpful. Love the bits about "x $ goes to each student...". Very, very helpful to my friends that want yearly pay increases that you haven't split out that a big chunk of every dollar, going to "schools" never gets to the kids."
Gee, Paul, can you name the 2 legislators (one from each party) who said they would be fine with salary caps on school district central office administrators? (I assume that is what you mean by "middle management").
Some of us have been beating our heads against a brick wall for years about such administrators earning in the neighborhood of $100,000 and hearing that the only people earning too much money were unionized school teachers.
If 66 & 67 don't pass, what happens to the attempt to end the tax on unemployment benefits?
What happens to Project Independence funding to help seniors stay in their homes?
Or doesn't that matter because this debate isn't about what happens in the real world, only about theory of taxation and budgets?
Dec 4, '09
Peri: And was any of this paid for by an increase in their salaries? You are suggesting so but providing no evidence of it. Maybe, maybe not. Maybe they were well off already or inherited some extra dough to help make this happen.
Dec 4, '09
"I only know two schools middle managers. They're married. After the last measure, they decided to take another trip to China and pick up a baby, so some good does come to kids, even when $$ go to middle management!"
Peri, UL is right! Do you know these folks well enough to know their net worth? Do you know if they live entirely on their salary? If they have never worked anywhere else but in schools (first as teachers perhaps, then after getting an administrative certificate or other training moving into management) and you know for a fact that they have never had any income outside of working in school management (never won the lottery, inherited money, etc) then you might have a point.
But I don't recall you ever talking before about the crusade some of us have been on for a long time to bring as much attention to management salaries as to the salaries of teachers and other frontline workers who happen to be unionized.
Dec 4, '09
I will say that for the crap teacher's put up with from disrespectful, snotty-nosed brats with an entitlement syndrome, they deserve every penny of their 9 months of work.
LT is right. Administrators are always given a free pass, while K-12 and Higher Ed teachers are sniped to death. I myself over at Jack Bog's Blog have been guilty of doing this, but I did not leave the administrators out.
I blame administrators making too much on the whole "reinventing government" crapola where the Public Sector looks to the Private Sector for human resources andponies up "market competitive pay" as a result; along with other wannabe private sector bunk such as TQM and Six Sigma whose sole purpose in being used is to employ some consultant for 6+ figures of tax payer dollars.
What would some ex-VP or CEO from the private sector know about running a Public Sector agency where the vast bulk of the money is appropriated from a budget and the remaining is acquired via grants and user fees?
Why does the Public Sector feel the urge to recruit Private Sector upper- and middle-management?
What does the Public Sector hope to learn from the Private Sector beyond accounting gimmicks that hide losses and allow one to leave the deck of cards to collapse on their successor(s)?
Dec 4, '09
The Public and Private Sector are each two different beasts is all I am saying. Yes, I am a little bit cynical both for different reasons. Yet, working in the pseudo Private Sector for a nonprofit who gets Federal grants, but cannot raise capital via the issuance of stock, has left me with the impression that skills, norms and attitudes concerning the "market" are not easily transferable from one sector to the other.
I don't buy into the prevailing notion that all innovation comes from the Private Sector and we should look at shysters like Maurice "Hank" Greenberg as great teachers coming to enlighten us unwashed masses.
If anything, Hank Greenberg built AIG via aggressive deal-making coupled with morally dubious accountants. Then again, AIG never did collapse under Hank Greenberg, Hank just passed the deck of cards to collapse under his successor's head.
Dec 5, '09
I read that Nike and PGE are supporting Stop Job Killing Taxes. Large donations. Given the number of families those two companies alone clothe and feed through employment it gives me pause for thought. I've seen supporters of 66 & 67 say that Nike only pays $10 a year in taxes. This is ridiculously false. Oregon has the fifth highest rate of taxation on personal income. Oregon also has one of the highest rates of unemployment in the nation. Currently 7th highest in the nation according to the latest data from BLS. I am still opposed to 66 & 67 because they blame job creators for a shortfall in state budgeting. However, our well respected long-time State Economist, Dr. Tom Potiowsky has stated that our revenue shortfall is not due to corporation tax rates, but to the dramatic fall-off of revenue from personal income tax due to the high unemployment rates in the state. So why do we want to tax the businesses who would create jobs, which would then allow unemployed individuals to return to work and contribute their share to the coffer?
Potiowsky also contributes the shortfall on reduced lottery revenue. Less consumer spending preventing consumers from purchasing lottery tickets of which 93% of the revenue goes to the general fund for schools, health care, and public safety. The exact areas 66 & 67 are trying to make up for. Both Steve Shields and Governor Kulongoski have stated publicly that these measures are not a solution, but only a patch. I cannot support the measures due to 1) the high unemployment rate that has caused a shortfall due to lost personal income tax. 2) the Robin Hood mentality of the measure, 3) the basic economic principal that tax reduction creates employment, and 4) perhaps the most important reason: the measures will create a reduction in the philanthropic contributions that our largest employers make to our schools and our community in general. People tend to forget just how much they give to our schools and communities.
If we can create jobs, the reason Dr. Potiowsky states is the reason behind the shortfall, then people will spend money on lottery tickets, as Dr. Potiowsky also points out as a major reason for a shortfall. We're not going to fix this problem by taxing business. The measures do nothing to put people to work, they in fact hinder that goal.
Dec 5, '09
TJ
No, I don't want to read any of your educratic theories. I want hard data from an unbiased source that shows spending more money on education will improve test scores and reduce drop outs. Simply, I want to see that more kids, when getting their diploma, can read, write, add and subtract at the 12th grade level because we spend more money.
Dec 5, '09
"I want hard data from an unbiased source that shows spending more money on education will improve test scores and reduce drop outs. Simply, I want to see that more kids, when getting their diploma, can read, write, add and subtract at the 12th grade level because we spend more money." http://www.getreadyoregon.org/newrequirements.aspx
MP--money or no money, graduation requirements in Oregon are changing.
Now I don't know what you mean by an "unbiased source", but money or no money our local school board had a work session recently on how to satisfy the requirements for such things as writing competency.
If you really live in the 97303 zip code, you might be able to find audio or whatever of the work session here http://www.salemkeizer.org/
If you want a source which has nothing to do with Oregon, go to the America's Promise website and look at the dropout prevention programs.
Dec 5, '09
But I don't recall you ever talking before about the crusade some of us have been on for a long time to bring as much attention to management salaries as to the salaries of teachers and other frontline workers who happen to be unionized.
You'll find none more supportive of those actions than I am. I think there is zero merit in the argument that says teachers' salaries are too high because of the unions. If their union plays a role in M67/68, then it's only because they're using their collective bargaining power to make sure they have what they need to do their jobs right.
Dec 5, '09
Oregon has the fifth highest rate of taxation on personal income.
When you look at ONLY personal taxation, sure. But keep in mind that when you look at the WHOLE picture, the absence of sales tax plus a cap on property taxes gives us one of the lowest tax burdens in the country.
For example, if we replaced Oregon's tax structure with -- say -- Idaho's, it would generate even more money than 66/67! But yes, income taxes are higher.
And "crediting" large companies for creating jobs is fine, but let us not forget that it is a chicken-and-egg situation: Where do those companies get the cash to hire people? From working families who buy those overpriced shoes in the first place!
But even though the business/personal ends of the equation are both equal partners in the economic engine... for some reason our tax structure is tilted very much in favor of businesses, while middle-income people without the resources to whittle down their taxable income often end up with a higher effective rate.
So please don't dangle the tired line of "businesses create jobs" because: 1. That's true only so far as families buy their products or services, and 2. Payroll is deductible anyway, and neither 66 nor 67 add any payroll tax.
Dec 5, '09
Well said JHL. Attempting to link tax assestment directly to private sector job creation is decidely sketchy. Private investment in any business that might employ someone is determined by potential ROI on sales of a product or service. In this economic climate, what product or service is someone likely to create, or expand, to market to except the public sector or those ventures subsidized by the public sector? What private sector product or service do we not currently have in over abundance? Because of some change in tax policy is a private investor going to open a new sneaker factory in this country? Public sector employment, enhanced by measures 66 & 67, currently has the greatest potential for re-invigorating private sector employment growth, it seems to me.
Dec 5, '09
I love that your pdf's. Nice work!
Dec 6, '09
JHL commented: ...'the absence of sales tax plus a cap on property taxes gives us one of the lowest tax burdens in the country.'
For the record, Oregon's per capita tax burden of ~$3719 is ranked right in the middle at 26th in the US - so it's not really accurate to claim it is 'one of the lowest tax burdens in the country'...
Idaho has a higher tax burden because per capita income is lower in Idaho than in Oregon. But Oregon state income tax and property tax rates (by any measure - even with the cap) are much higher than Idaho's - likely off-setting much if not most of the revenue generated by Idaho's 6% sales tax. So I'm not so sure about your claim that Idaho's individual tax structure would generate more revenue than Oregon's current system - even before 66/67. Do you have some data supporting this?
Oregon 'families' and 'working families' are not the ONLY customers for the products and services of Oregon businesses - and Nike is not the only business in Oregon.
Payroll is a deductible business expense, yes... but when you tax more of a business's income/profits, don't forget there's then less $ available for paying for higher salaries/benefits for current workers or hiring new employees (unless the business is able to increase their revenue (e.g., raising prices?) or cut expenses elsewhere)
Dec 6, '09
The democrats in Salem have had over 4 years to fix the tax problems and revenue flow. Measures 66 and 67 are not fixs, they merely cite an amorphous alternative source (the 'rich' and 'big business') for the continuation of the problem.
I voted "YES" no M30 (maybe not the correct number) in 2004 to temporarily raise ALL of our income taxes in order to help out then and give the dems and Governor Kitzhaber time to fix things. They did nothing. I'm voting "NO" on 66 and 67. Bring on the sales tax.
Dec 6, '09
Carol wrote to ME!! Personal. I wanted to thank her in person, so I drove over to the return address to discovered an empty big box store with "Sleep to Live" on the papered-over entry way. So our crack team of video experts whipped up a quick YouTuber video reply for her:
http://www.youtube.com/watch?v=FlaTBT5l6FU
~EIO
Dec 6, '09
"don't forget there's then less $ available for ... hiring new employees"
A business is not likely (or shouldn't be likely) to hire an employee who doesn't bring a net economic benefit to the business.
If I'm Nike, I'm not going to give out an additional $50,000 in salary/benefits to a new employee unless the projected marginal benefit of hiring that employee is > $50,000 + opportunity cost + $1.
Measure 66/67 are irrelevant to that.
Dec 6, '09
I voted "YES" no M30 (maybe not the correct number) in 2004 to temporarily raise ALL of our income taxes in order to help out then and give the dems and Governor Kitzhaber time to fix things. They did nothing. I'm voting "NO" on 66 and 67. Bring on the sales tax.
Does somebody want to remind Kurt that M30 was defeated? M30 didn't pass so nobody's income taxes were increased, the dems were not given time to fix things, at least not in the way you insinuate they were.
Dec 6, '09
I'm sorry Sportland, please tell me how much "time" is enough. The democrats had from Feb 2004 to now to fix things. How much time would be enough?
Dec 6, '09
Love the video, but does the URL at the end really work?
Dec 6, '09
So how many people that are wanting this to pass actually own a business or have to live within real budget constraints? Not a Government budget or allocation.
S corp will have to pay, it just makes a difference on when or what is taxed. It ends up being very close to a C corp. The taxable income is a pass through in a S corp. You are right in that payroll is deductible, however you need to have income and profit to be able to hire an employee.
If a business cannot be successful the business will shut down. Hows that for creating jobs? There are more farms or farm related business out there than you think.
Dec 6, '09
Does Kurt Chapman have amnesia? Has he forgotten that the attempt to "fix things" is directly related to reforming the tax structure which handicaps the state? Has he also forgotten Karen Minnis' control of the House until after the 2006 elections, which would shorten his timespan by 2 years? Perhaps he is right to criticize the 2007 session for not "fixing things" under Democrat control, but then he forgets they didn't have the necessary 2/3 majority to enact tax reform. So now that the Democrats actually have that power, and have proposed a temporary fix, he forgets all the relevant history. Or maybe he meant "fix things" by slashing education, social service, and police budgets? What do you want Kurt, a fix to the revenue situation or a chance to blame Democrats?
And as far as smaller class sizes equaling better results, why do parents with means and desire put their kids in private education? Are the teachers more qualified? Is it the awesome sports facilities? Or perhaps it is due to the key difference between public and private ed which is.....wait for it....class sizes and student:teacher ratios?
I will tell you this, having worked in public schools for 8 years and private schools for 5, the biggest, single contributor to my students' success is the amount of time they have with an interested adult. My last year in public ed in Oregon I had classes of 37-42 kids, now I have 12- 18. And guess who performs better? Every public educator in the state will tell you that class sizes and increasing bureaucracy are the main impediments to improving student performance. And to every single one of them a big apology is owed for placing obstacles that prevent them from doing their job. These public servants are killing themselves to get your kids to read, write, add and most importantly...think for themselves.
James Mattiace Kingdom of Morocco
Dec 6, '09
"There are more farm or farm related business out there than you think."
There are also more pitiful businessmen and women in the state of Oregon than most think. Products of sub-par K-12 and university education and derelict infrastructure in this state, these folks have succombed to corporate welfare and whining about taxes to maintain their already tenous foothold in the market. They are pawns lacking the wherewithall to truly create jobs.
I see two choices: 1) Vote Yes. Keep a teacher's job and maybe someday build a bridge or a railyard or two and start heading in the right direction. 2) Vote no. Line up for a job at the next Carl's Jr. or Dick's Sporting Goods on your block. The only work will be selling what California immigrants want to buy.
Dec 6, '09
Funny that people are pushing YES on 66 & 67 while President Obama is beginning to push a Jobs Bill that will CUT TAXES for businesses.
Dec 6, '09
"So how many people that are wanting this to pass actually own a business or have to live within real budget constraints?"
At least one: Me.
I own an S-corp, and an extra $140/year would not be a bank-buster for me, though it's irrelevant because since I have relatively low overhead, I do tend to show profit and pay above the minimum tax already.
Our combined household income is not over $250K, so I'm not affected by the personal income marginal rate increase.
When I hire an employee though, you'd better believe that I make sure that having another employee is going to make me more money than I'm spending on him/her. And since I get to deduct the payroll, there's absolutely no reason that these measures would affect my hiring practices.
You want to talk about payroll taxes, that's another story. But don't pretend that has anything to do with 66/67.
Dec 6, '09
This pure "middle management" abmbrosia! I know!!!
Dec 6, '09
How long does it take to "fix" a system that the Rs had fiscal control over for more than 10 years previous to 2004, plus the horrible anti-government initiatives that capped property taxes, increased prison costs, created the kicker and many other bad legislation that didn't go through the legislative "quality control" process, as flawed as it may be. The system was badly broken and the Ds have instituted many reforms, including instituting the Rainy Day Fund, that just haven't had time to work.
Classic case of screwing up, handing the ball off to the other team, then claiming it's their fault.
Dec 6, '09
"72IH: So how many people that are wanting this to pass actually own a business or have to live within real budget constraints? Not a Government budget or allocation."
I do, a C corp, and we qualify above the threshold for an increase. And we live within budget constraints (just like government) and we do not contract with government. Even so my business receives far more in government benefits and services than any tax increase I may be liable for. I am strongly supporting both 66 & 67.
8:54 p.m.
Dec 6, '09
"I want hard data from an unbiased source that shows spending more money on education will improve test scores and reduce drop outs."
Depends on what you spend it on. All districts across the state have, to some extent, discretion on state funds. Mine spent it on the things I detailed--things that are well-researched to be salutory to outcomes, and which cost money to execute.
9:00 p.m.
Dec 6, '09
"they merely cite an amorphous alternative source (the 'rich' and 'big business') for the continuation of the problem."
It's not amorphous at all---they are the groups whose tax burden has shrunk by a factor of three in this state over the last 30 years, and whose relative earnings are off the charts while the other quintiles get along on a plateau at best, retrenching the further down you go.
Let's continue referring back to the additional tax burden for these all-American job creators: $140. Talking about "job-killing" in this context is just plain offensive.
9:02 p.m.
Dec 6, '09
"Funny that people are pushing YES on 66 & 67 while President Obama is beginning to push a Jobs Bill that will CUT TAXES for businesses."
If it's an across the board cut, it's not funny it's stupid and corrupt. If it's targeted and incentivized, it makes more sense. But fundamentally it's irrelevant, because we're talking about Oregon corporate minimums, which have not increased in over 70 years. Stick to the topic at hand.
Dec 6, '09
they are the groups whose tax burden has shrunk by a factor of three in this state over the last 30 years,
Could it be due to the fact that the number of individual returns has gone up 31% since 1990 while C-corps returns are down 7%. Don't forget that 9% of taxes collected under individual returns are directly related to business activities (sole prop, S corp, partnership, real estate, etc).
Dec 6, '09
I get 66.
Not totally getting 67? For instance: Oregon Income Tax Increases – Sales Tax in Disguise? and here: Do tax increases "target the middle class? What is to stop them(C-corps,Nike,etc.), from just passing the costs(1.3% tax on profits above $250,000)on, kind of a hidden sales tax? In my view, 67 is still modest and I am good with the other pieces of it. But is it the right approach? Should more emphasis been on 66? Oregon may move one step closer to having a tax system based on ability to pay, but ability to cost shift by top C-corps to customers will still exist.
Dec 6, '09
Joe M., thank you for your thoughtful comments.
9:09 a.m.
Dec 7, '09
Oregon may move one step closer to having a tax system based on ability to pay, but ability to cost shift by top C-corps to customers will still exist.
Ok. Let's say that local coffee shop chain X has to pay the corporate minimum this year. They have three locations and 12 part time employees.
If their gross receipts are $499,999 for the year, they will divide up $.41 per day among their three locations or call it $.14 per location.
How will they pass this on to the customers, and will the customers quit buying espresso when the price per cup goes up by a quarter of a cent per cup?
Dec 7, '09
This has more to do with how Measures 66 & 67 are being promoted: I think the measures will lose, unless voters see it as restoring tax fairness. The measures are one step in correcting the unfair shift of tax burden from wealthy individuals and corporations to average working people that has occurred over the last 30 years. Without that context, it will simply be criticized as just "raising taxes". The defenders need to show how much the tax balance has shifted to the backs of the middle class to underscore that the measures are redressing an unfair tax system.
For example, show the eroding portion of Oregon taxes paid by corporations over the last 50 years. Do Oregon corporations really use only $10 in state services each year? (Think police, roads, ports, access to courts...) Of course not. So who pays the difference? The middle class.
I hope there are some ads in the works that will address this issue.
Dec 7, '09
So, posters at the top of this thread were asking where it goes and if it helps, and that has successfully been spun to "can you afford it".
Basically, it doesn't matter if we waste it or it doesn't help the kids; you can afford it.
Reread this comment when you lose in January instead of blaming feckless right wing radio (which Dems are behind).
11:51 a.m.
Dec 7, '09
So, posters at the top of this thread were asking where it goes and if it helps, and that has successfully been spun to "can you afford it".
There are lots of angles. One being pushed by the opposition is that "we can't afford it" or (even more irritating) "They'll just pass it on to The Consumer".
I lifted a quote from one such comment and offered a rebuttal. No spinning on my part, just a reply to one of the many points offered in opposition.
<hr/>I've noted how hearbroken you've been at the loss of Pat Ryan, but Geeze..........Don't go all pretzel trying to belabor the point.
Dec 7, '09
How much tax revenue will be raised from companies payintg $150 vs $10?
Dec 7, '09
Legislative Revenue Office's analysis of the measures
The biggest contributor to the revenue is the top marginal rate on the corporations with profits in excess of $250,000 ($108 million in 2009-11)(which was what my question was about Pat Ryan).
Followed by the minimum tax increase on C-corps ($93 million in 2009-11; more likely to be large biz than small)(which is the answer to gl's question).
Pat Ryan, You very nicely answered the question I did not ask on a piece of 67 I was good with. As you pointed out it is hard to argue with any of the boringly modest changes that are in 67. Except my question "...ability to cost shift by top (those who have significant profit or have Oregon taxable income over 250k) C-corps to customers will still exist."
Again: Is it not a hidden 1.3% sales tax? If yes, won't they just pass it on? It still seems small, but an odd precedent to set and the oppositions only weak argument. Some are so big that it may be passed nationally or internationally(Nike). Who are we kidding? Should we have just divided up the top 1% in 66 with a more progressive tax? Is that plan B? If yes, than I am good with that, and forget everything I just said.
Dec 7, '09
Joe M: where were you during the session when all this was being debated?
3:48 p.m.
Dec 7, '09
Joe M,
As I understand it, 66 is an increase on marginal tax rates on net income over 125,000 for individuals and 250,000 for couples.
67 is the corp minimum, so I responded re 67 and not re 66. That 66 targets mostly entities that have received disproportionate tax breaks over the past 30 years (IMO), was not under discussion, but works fine for me.
If I need correction, I'm good with that......
Dec 7, '09
gl, $150 vs. $10 would be $93m vs. $6.2m
Dec 7, '09
But of course! To have a bogus contact tag would be in violation of Oregon Election laws...
~EIO (The MacDonald Group - PAC #14047)
Dec 7, '09
Correction to Joe M --
GL asked how much extra revenue was going to come in as a result of those companies paying $150 instead of $10. To answer that question, please see page 14 of the linked PDF of LRO's analysis.
The estimated impact for those C-corps paying $150 instead of $10 minimum tax is expected to be $2.3M for tax year 2009, not $93M as Joe M stated.
The balance of the $93M total impact from C-Corps comes from increased marginal rates ($43.9M from companies with Oregon sales of $10M+/year) and from C-corps paying more than $150 minimum ($34.3M from companies with Oregon sales of $10M+/year, meaning those will pay at least $15,000 in minimum tax, not $150).
In other words, the 2,188 C-corps at the $10M+ sales level (about 6.5% of all C-corps in the state), each of which will be liable for a minimum of $15,000 state tax according to the linked analysis (and a little less than half of those will pay more than the minimum anyhow), will contribute about 84% of the increase in state revenues from this measure.
The $150 minimum level is effectively meaningless, because that's not where the state will be getting its money. The reality is that had the lowest bracket of minimum tax been left alone (i.e., remained at $10 instead of $150) almost 2/3 of all C-corps in the state would have been unaffected by the measure, while retaining more than 97.5% of the revenue to be generated.
This measure is NOT about the $150 minimum. It's about the minimum that's 100 times as large as that, and it's about increasing the marginal corporate tax rate on profitable companies.
Meanwhile, no thought is given to whether the rather generous tax CREDITS offered by the state (which are, after all, budget expenditures) should be revised. Rather than raise taxes on companies that may or may not be able to afford them, how about just making sure that those companies which are already liable for existing taxes actually have to pay them? I believe the dollar amount in tax credits used by companies in the state is roughly in line with the $93M total revenue expected to be generated.
In other words, companies with actual profits, subject to existing tax rates on those profits, get a pass because the state effectively picks up the tab for those taxes by offering tax credits. These are, again, PROFITABLE companies (hence with greater than minimum tax liability to start with) with an obvious ability to pay said taxes out of said profits.
But instead of having companies which can afford to pay, pay their existing taxes, M67 would rather keep the giveaways to profitable companies and make unprofitable companies pony up. Utterly senseless.
Dec 8, '09
I'll be voting no on both measures. If the increased taxes are supposed to benefit the middle class then the middle class should be willing to pay the tax bill.
Forcing someone else to pay for your benefit is unfair and poor public policy. These measures are nothing more than mob rule where the mob uses its numbers to force someone else to do something. Even the TV ads pander to the middle class by saying it is time to protect the middle class and to force others to pay more. Mob rule isn't a progressive value, these measures deserve to fail.
If the middle class wants better schools or more government then look in the mirror and pay more taxes for the additional services that you want.
12:45 p.m.
Dec 8, '09
Forcing someone else to pay for your benefit is unfair and poor public policy. These measures are nothing more than mob rule where the mob uses its numbers to force someone else to do something.
I'm with you Andy. From now on, I'll withold taxes that go for elective wars, farm subsidies, medicare, prison construction, prison staffing, subsides for firms that outsource labor overseas, replacement taxes that should have come from churches, and property taxes that go to put out fires at other people's houses.
Yeah, that's the ticket......
1:39 p.m.
Dec 8, '09
Andy, it benefits the middle class because the middle class is ALREADY paying...more than its share. Having undertaxed groups pay more of their share helps restore balance.
Dec 8, '09
To have a bogus contact tag would be in violation of Oregon Election laws
Ehh... Not really.
To intentionally mislead people as to the source of the campaign material would be a violation;
To simply have inactive contact information is no big deal because the Oregon Supreme Court has been very clear in stating that Oregon campaign materials do NOT require any kind of attribution. It's just not a good idea.
<h2>Of course, federally, the FEC has attribution rules that apply to federal races and the FCC has rules on what must appear on TV commercials for ANY kind of campaign.</h2>