Background & Problem Statement
Background & Problem Statement
CHAPTER TWO Taxes F O C U S : Business Climate
FOCUS Business Climate Taxes Background and Problem Statement Oregon’s tax structure must be competitive to attract, retain, and support high-wage job growth. It is one driver, among several, that are critical in creating an environment where workers and employers can thrive and where the economy can prosper. Small and medium-sized businesses are particularly affected by compliance complexity and layered local tax burdens, including income, business, property, and special-purpose taxes, which together create uncertainty and increase the cost of investment. The current state tax structure places a higher burden on middle- income households than all of our neighboring states. This structure underpins the state’s lack of competitiveness and limits its ability to balance budgets, sustain essential public services, and invest in long-term economic growth. Under current state and local tax structures, including income and sales taxes but excluding property taxes, a single 1 filer earning $40,000 in Oregon faces an effective tax rate of 20.4%, compared to 18.4% in Washington and 19.9% in California. Similarly, a household earning $80,000 has an effective tax rate of 17.6% in Oregon, compared to 2 16.0% in Washington and 17.0% in California. These differences demonstrate that Oregon’s comparatively higher tax burden is not limited to high-income earners; it affects households across the income spectrum. Even seemingly small differences in effective tax rates can translate into meaningful annual costs for Oregon residents. When combined with Oregon’s housing affordability challenges and other rising costs of living, these higher tax burdens can further reduce disposable income and make it more difficult for households to achieve economic security and upward mobility. See Appendix F for additional information. EFFECTIVE TAX RATE: Single filer earning $40,000 % % % 20.4 18.4 19.9 OREGON WASHINGTON CALIFORNIA
Parent: Chapter 2: Taxes · PDF: pp. 16-17