March 3, 2025
What happened: On March 3, OBI Policy Director and Counsel Derek Sangston testified before the Senate Committee on Finance and Revenue in support of two bills, SB 381 and SB 490, that would increase the threshold for Oregon’s corporate activity tax to $5 million. The threshold since the CAT’s 2019 adoption has been $1 million in annual commercial activity.
Why raise the threshold? Companies with $5 million or less in commercial activity filed 73% of all CAT returns in tax year 2022 yet accounted for less than 7% of CAT revenue, according to the Legislative Revenue Office. Raising the threshold to $5 million, then, would provide a great deal of relief without sacrificing a great deal of revenue. That’s why other states with similar taxes have higher thresholds. Nevada taxes gross receipts over $4 million, and Ohio – whose tax served as a model for Oregon’s – recently increased its threshold from $1 million to $6 million.
Why it matters: Oregon’s effective business tax burden has increased by more than 30% since 2019, in part as a result of the CAT. The state’s corporate tax environment, according to the nonpartisan Tax Foundation, is now the nation’s second worst. States compete aggressively for business investment, and Oregon’s tax climate places the state at a significant competitive disadvantage. As businesses choose to invest in other states, Oregon will lose jobs and tax revenue. Increasing the CAT threshold, as these bills would, is a component of OBI’s Oregon Competitiveness Agenda.
Learn more: Click on the video to the right to watch Derek’s testimony and follow the link below it to read his written testimony. Learn about OBI’s Oregon Competitiveness Agenda here.