July 23, 2009
State Budgets: Oregon Governor Approves Tax Hikes, but Oregonians Might Not
Oregon Governor Ted Kulongoski (D) signed two major tax increases into law yesterday, raising the rates on high-income individuals and corporations. The state claims that it has a multi-billion dollar budget gap, so Oregon policymakers are looking to raise $733 million for the 2009-11 fiscal period:
- HB 2649 will impose a whopping 10.8 percent tax rate on singles' income over $125,000 and couples' income over $250,000. That's up from a current top rate of 9 percent. The new law ratchets that tax rate up even further for singles' income over $250,000 and couples' income over $500,000. They will pay an 11 percent tax rate, which ties Hawaii for the highest state income tax rate in the country. After 2011, all singles' income over $125,000 (couples over $250,000) will be taxed at 9.9%.
- HB 3405 will raise the corporate income tax rate from 6.6 percent to 7.9 percent for net income over $250,000 for 2009-2011, dropping slightly to 7.6 percent thereafter. Starting in 2014, a portion of these proceeds will flow into the state's rainy day fund. The minimum corporate income tax would also rise from the 1930s-era $10 to a sliding scale between $150 and $100,000, depending on gross sales.
While Governor Kulongoski says these "modest and targeted" taxes will help close the budget shortfall and create a more "equitable tax system," citizen and business groups have already begun the process of forcing the measures onto a statewide ballot early next year. Canvassing may start as early as today, and if 55,000 signatures are collected before September 25th, a vote will be held January 26th.
For our detailed analysis of these significant tax increases, see our Fiscal Fact.
For more on Oregon's tax system, see here.
