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Oregon's Economy: Revenue and Taxes

The Matterhorn in the Eagle Cap Wilderness of the Wallowa Mountains. (Photo courtesy Jim and Debbie Lynn Keefer)

The Matterhorn in the Eagle Cap Wilderness of the Wallowa Mountains. (Photo courtesy Jim and Debbie Lynn Keefer)

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Oregon’s state and local governments receive revenue from numerous sources including federal transfer payments; tuition, hospital and other charges; Lottery revenue; and taxes. Of all these sources, half of total state revenue is from taxation. Personal income tax and corporate excise tax are the most significant components of the state General Fund, and property tax is the most significant local tax in Oregon. These three taxes represent 80 percent of all state and local taxes. Oregon does not have a state sales tax.


The personal income tax is the largest source of state tax revenue, expected to account for 87 percent of the state’s General Fund for the 2013–15 biennium. Oregon’s taxable income is closely
connected to federal taxable income. The state personal income tax rates range from 5 percent to 9.9 percent of taxable income.


The corporate excise and income tax is the second largest source of state tax revenue. The corporate tax rates are 6.6 percent and 7.6 percent of taxable business income. For tax year 2011, less than 3 percent of corporate taxpayers accounted for three-fourths of income and excise tax revenue from C corporations, the most common form of business corporations. The minimum corporate excise tax ranges from $150 to $100,000, depending on the corporation’s Oregon sales. Almost 75 percent of all C corporation Oregon taxpayers paid the minimum tax for tax year 2011, but minimum taxpayers accounted for only 14 percent of the total tax paid by C corporations in 2011.


Local governments in Oregon began taxing property before statehood, but the current system is mainly the product of two statewide ballot measures passed in the 1990s, Measures 5 and 50. In Oregon’s property tax system, each taxing district is limited to a fixed permanent tax rate, but voters can temporarily increase rates through local options levies or to repay bonds used to fund capital projects. Individual properties have a taxable assessed value equal to, or less than, the real market value that cannot increase by more than 3 percent per year and cannot exceed the real market value. Taxes for an individual property are calculated by applying the tax rates of the local districts to the taxable assessed value of each property and are generally limited to no more than $5 per $1,000 of real market value for education districts and $10 per $1,000 of real market value for all other taxing districts. Levies to repay bonds are outside of this limit.

 

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