An Oregon Legislature hung up this season over state finances might in the next regular session, in theory, find some interest in a provocative idea from the Oregon Center for Public Policy:
Require reporting, in open public record, more information about finances among the larger corporations doing business in Oregon, mainly concerning the calculation of taxes paid and benefits received.
Such a concept is going nowhere any time soon on the national level.
In 2021, Congress passed the Corporate Transparency Act, which was intended to pierce the sometimes mysterious forms of ownership — involving shell corporations, layers of ownership and foreign involvement — nationally.
It went into effect last year, but on March 2 the Trump administration announced “not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.”
The OCPP proposal (proposed legislative text has been released) is set up differently than that law. It’s intended to work through tax reporting requirements imposed on publicly-traded corporations — which for the most part means the larger ones — and others which they substantially control. The aim is to elicit not so much forms of control but a sense of how the tax-related finance picture in Oregon actually works.
The group said its plan would require “corporations to make public certain tax and financial information by filing a disclosure with the Oregon Secretary of State. The Act would apply to C-corporations that are publicly traded, meaning they are listed on a stock exchange like the New York Stock Exchange or an over-the-counter market. These corporations are already required to provide significant tax disclosures to the Security and Exchange Commission, so any cost of compliance would be minimal.”
So far as I’ve been able to tell, nothing like it is underway in other states. Most states do impose a corporate income tax, but not all. Some, including Washington, along with Texas, Wyoming, Nevada, South Dakota and Ohio, have no corporate income tax as such, but generally they do apply other taxes and fees aimed at businesses.
But then, Oregon often has been willing to take a lead.
Here is how the OCPP summarizes its argument:
“Corporations have designed the tax system to their advantage. Shining a light on the corporate tax system would allow Oregonians to see which corporations pay the bare minimum in income taxes, while reporting big profits to shareholders. It will allow Oregonians to see which corporations exploit what tax loopholes and subsidies, and which might be shifting profits overseas to avoid taxes on profits earned in Oregon. In short, corporate tax transparency is essential to make the corporate income tax system work for the benefit of all Oregonians.”
This is not, or at least not necessarily, a call for changing or increasing corporation income tax rates. In comparing the basic rates, Oregon is more or less centrist. Its tax rate, averaging across brackets, is lower than in California but similar to Idaho. Rates, and more important the rules surrounding what is counted as net income and what can be deducted or otherwise vary the amounts to be paid, are widely different across the states.
So what is it we ought to know?
The OCPP makes three basic arguments. Each might lead to conclusions that corporations are underpaying their fair share or, if complaints by some corporate advocates are right, the system really doesn’t benefit them at all but hurts the business climate.
First, the OCPP has argued that a number of the larger corporations have been (legally) avoiding taxes through use of tax havens and other means. The specifics, if made available, could clarify what an appropriate response would look like.
Second, state corporate tax breaks have been blasted as giveaways and supported as investments in the economy. Right now, Oregonians have little way to assess this, but an open book on the breaks and how they’re used might offer insight.
Third, corporations have argued that tax proposals involving increases or more compliance issues could drive them out of state. It’s an argument often fraught with emotion but too little analysis; more information about how taxes actually impact large businesses would be useful for all legislators to have.
Whichever way the information runs, Oregonians would have a better basis for developing business tax policy. Only a sponsor is needed to launch the discussion.
Randy Stapilus has researched and written about Northwest politics and issues since 1976 for a long list of newspapers and other publications. This guest commentary is from news partner Oregon Capital Chronicle, and it may or may not reflect the views of The Corvallis Advocate, or its management, staff, supporters and advertisers.
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