Scheming for Revenue

Dennis Linthicum

Scheming for Revenue

State law proved to be no match for Senate Democrats' desire to illegally pass a $22.8 million-dollar tax hike in the House last week. Senate Bill 28 was passed in the House and will spike taxes at least $22.8 million in the two upcoming budget cycles. Our Republican legislators universally voted against the tax increase and made the claim that SB 28 should have originated in the House because it is a revenue raising bill.

Additionally, the bill allows taxes to be raised with a simple majority vote versus the three-fifths or 60/40 margin required by the Oregon constitution.

In 1996, Oregonians approved Ballot Measure 95, now Article IV, Section 25, of Oregon’s Constitution, which mandates that tax increases receive a three-fifths vote of all members in the Legislature. Article IV, Section 18 of the Oregon Constitution requires tax hike bills to start in the House of Representatives. Therefore, SB 28 is illegal on two fronts, 1) it passed without the legally required three-fifths vote, and 2) it inappropriately originated in the Senate.

Senate Republican Leader Ted Ferrioli stated, “Disregard for the Constitution prevails yet again, with the House passing an illegal tax hike. This outrage will be countered with litigation. Democrats want to ignite fury within the hearts of Oregonians by trampling on the Constitution.” 

Oregonians are being exploited by House and Senate Democrats who are violating Oregon’s Constitution to dramatically spike taxes.

This tax hike is a demonstration of their willingness to approve “lawlessness.”

Small Oregon businesses will see a dramatic hike as the legislature schemes for revenue. For some businesses, it will be a brand-new tax. Senate Republicans decried the passage of SB 28 saying it thwarts the will of voters. Republicans also point out that it should have first been introduced in the House of Representatives.

 Senate Bill 28 modifies how Oregon corporate income taxes are apportioned for intangible property and services. It changes the apportionment method from a cost-of-performance method to a market-based method.

If it moves

 The cost-of-performance method attributes all corporate income tax revenues to the state where the greatest proportion of the activity is performed. For example, if most of the effort for manufacturing and creating your product is done out of state then your product would be taxed based on the appropriate proportion of in-state verses out-of-state work.

The market-based method attributes corporate income tax revenue to the state where the customer is located. In other words, even if all your work, offices and effort are in another state, Oregon will tax your business based on total sales if any of those sales occur in Oregon.

However, the Democrat raiding party is not finished picking your pocket. House Bill 2060A is another direct tax increase on small businesses. It too, passed out of the House by a simple majority.

HB 2060A imposes a tax increase, up to 40%, for small businesses with fewer than ten employees while preserving lower rates for larger S-corps, LLCs and LLPs.  It is a $196 million-dollar tax increase on Oregon’s smallest businesses.

The 2013 Grand Bargain between Democrats and Republicans provided tax relief to small Oregon businesses. House Bill 2060A would remove the protection provided to small businesses by Republican legislators in 2013.

Also, the tax-grabbers decided to go after the smallest-of-small businesses. They changed the language to expand the size of companies that could quality. Formerly, the Grand Bargain allowed an individual business owner to qualify for a lower tax rates. This House Bill increases the size of the company receiving the benefit by ten-fold. This means a small individually-owned business, or the Mom and Pop operation, are eliminated from the possibility of a reduced tax liability. These small businesses will be forced into paying more of their hard-earned income into this Democrat sponsored revenue collection scheme.

Not only are more employees required to qualify, but the Democrats jimmied the numbers by adding even more requirements for qualifying businesses. These added conditions reduce the overall number of businesses that will be able to qualify for the lower tax rates.

See… Money is easier to find than gumballs in the sofa cushions

This financial tyranny runs contrary to our state and nation's most sacred principles. George Washington said, “I think the Government hath no more Right to put their hands into my Pocket, without my consent, than I have to put my hands into your’s, for money…” 

Washington's thoughts flow directly from our Declaration of Independence, immediately following Life, Liberty and your happiness through just pursuits. It states, "to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed."

However, today the folks in Salem are following the rule that Ronald Reagan criticized so poignantly. He claimed that big government policy wonks believe in the motto – "if it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Remember, if we don’t stand for rural Oregon values and common-sense - No one will.

Best Regards,

Senator Dennis Linthicum signature

Dennis Linthicum
Oregon State Senate 28

Capitol Phone: 503-986-1728
Capitol Address: 900 Court St. NE, S-305, Salem, Oregon 97301