ONTARIO — Consumers in Oregon may start to see a tax making its way to an itemized receipt for goods at businesses that are now having to pay the Corporate Activity Tax, commonly known as the CAT tax. Passed by the Oregon Legislature in 2019, the tax was not called a sales tax and was meant to be for businesses that had total revenues of more than $1 million per year. However, many business owners are seeing it as a sales tax and, even, Sen. Lynn Findley, R-Vale said in a phone interview on Thursday, “It’s a sales tax.”
It is noteworthy that over the years, Oregon voters have rejected a sales tax multiple times. Findley said he and his Republican colleagues “spoke for hours on the floor against the bill,” but it ultimately passed.
Robin Maxey, public information officer for the Oregon Department of Revenue confirmed on Friday that the corporate activity tax is known as a modified gross receipt tax vs. a gross receipt tax, the latter of which taxes a business on every dollar that comes in the door and not necessarily profits.
The modification tax, he said, comes in with a “couple caveats that allow a couple subtractions” from the CAT tax, such as being able to take the total labor cost off.
For chain businesses, Maxey said the tax is more complicated, as they are known as a “unitary group,” which come with there own rules.
Noteworthy, however, is that the CAT tax “doesn’t address whether a business can or can’t [add a tax onto a sales receipt], or how they do it,” according to Maxey.
The Legislature did not include in the law how to go about listing the tax.
‘They were just hoodwinked’
“I hate the tax,” said Findley. “It’s regressive and multiplies for vendors. It’s a terrible tax.”
He said Democrats thought the tax would be “eaten up by producer and retailer,” but instead those costs are passed on.
Furthermore, Findley said the some products can get taxed up to seven different times before finally being consumed. And there are few exceptions, but they include marijuana, tobacco and alcohol which already have their own tax.
“It is terribly progressive, doubling, and moving down the chain and all consumers don’t know much about it,” he said. “They were just hoodwinked.”
Findley provided an agricultural example of goods taxed multiple times.
“A farmer grows a product to sell a bale of hay, and he sells that hay to Tillamook Dairy and they pay a CAT tax, then they sell the milk and pay tax every time,” he said. “But if a farmer sells to a cooperative or somewhere out of state, they don’t pay that tax.”
“It’s just bizarre, absolutely bizarre. It’s an Oregon only tax,” he said. “As such, it may behoove a farmer to stop selling his goods in state.”
While that might not impact Malheur County producers, who already send a lot of commerce to Idaho, the District 30 Senator said it might not bare well for the rest of the state.
“It’s an incredibly complex web that raises a billion dollars a years,” he said.
And, Findley indicated the tax isn’t really doing what it was supposed to.
“That money theoretically was dedicated to the common school fund and student success, but what happened with those programs, instead of the General Fund paying $7 billion for education, it pays less because of the offset by CAT,” he said. “Instead of a boon … it is not having the desired effect of increasing money for education.”