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Voters decide on Measure 118, known as the Oregon Rebate

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Voters decide on Measure 118, known as the Oregon Rebate

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Supporters of Measure 118, also known as the “Oregon rebate,” say passage would help working-class families and reduce child povertyTy, This makes Oregon the first state with a universal basic income program.

Voters will be asked whether the minimum tax on Oregon businesses with sales over $25 million per year should be raised by 3% and the proceeds distributed to all Oregon residents as a refundable income tax credit or cash payment starting in 2025.

Portland resident Antonio Gisbert, a former organizer with the American Federation of State, County and Municipal Employees, was the lead sponsor of the measure. More than 120,000 valid signatures were submitted to send the measure to Oregon voters.

The Oregon Department of Revenue estimated the refund at $1,600 for every resident who lives in the state more than 200 days a year, including minors. A report from the Legislative Revenue Office estimated the initial credits would range from $1,035 to $1,286.

Less than 2% of companies would be affected by Measure 118

Legislative analysts provided an updated report on Measure 118 to lawmakers during legislative committee days in September. They noted that Measure 118 would not change current tax rates — 6.6% for non-income of more than $1 million and 7.6% for income of more than $1 million — based on net corporate income.

“Oregon companies will continue to calculate their taxes at both the net income tax rates and the corporate minimum tax rate and pay the higher of the two,” the analysts said.

According to the report, most C corporations — about 34,600 — would not be affected by the measure because their Oregon revenues are expected to be less than $25 million. An additional 188 C corporations would not be affected because the tax from marginal tax rates is expected to remain higher than their minimum tax.

The analyst said about 1.8% of C and S corporations would see a tax increase under Measure 118. These companies account for about 65% of corporate taxes, which would rise to about 94%.

“The largest increases would be in wholesale and retail, from $396 million to $3.3 billion,” the report said. “The share of taxes paid by these sectors would increase from 29% to 41%. The largest percentage increase for any sector would be in utilities, from about $8 million to $152 million.”

State finance analysts warn of possible general effects on the fund

Legislative Revenue Office analysts estimated that Measure 118 could increase corporate tax revenues by $1.3 billion in the 2023-25 ​​biennium (if passed, it would be implemented in the middle of the 2025 fiscal year, ending June 30, 2025); $14.7 billion in the 2025-27 biennium; and $15.6 billion in the 2027-29 biennium.

Their report also said the rebate scheme could mean the corporate kicker would go towards education funding for 2023-25. A sales forecast released in August predicted a company profit of $883 million. Any increase in corporate tax revenue in the biennium would increase the kicker.

And analysts reported that Measure 118 would result in negative net cash flow and a reduction in transfers to the state's Rainy Day Fund because corporate tax revenues would be less than the amounts needed to fund the rebate program.

The report estimates the measure would result in 90% of C corporations with revenues over $25 million in Oregon paying the minimum tax, rather than the 40% that currently pay a minimum tax. That's because the corporate tax owed by many C corporations would move from the rate tax to the minimum tax.

“As a result, (the state’s) revenue from the minimum tax would increase and (the state’s) revenue from the tariff tax would decrease,” the report said.

The net cash flow impact would be positive in the current fiscal cycle but negative by $547 million in the 2025-2027 budget, analysts said.

The analysis estimates that at least 1,400 C corporations and nearly 800 S corporations would be affected.

Opposition and support for Measure 118

Hundreds of businesses, state lawmakers and Gov. Tina Kotek oppose the measure. The Polk County Board of Commissioners passed a resolution opposing the measure in September. And the Oregon Senate Republican Caucus called it a “dangerous experiment.”

The Defeat the Costly Tax on Sales committee has reported donations of more than $10 million. Contributions include $1 million from the Grocery Retail PAC, $250,000 from US Bank, $250,000 from Wells Fargo and out-of-state donations, including $250,000 each from Walmart, Home Depot and Weyerhaeuser.

Opponents say companies taxed the additional 3% would raise prices and slow job growth.

Proponents say the “rebate” would help working families — a family of four would receive $6,400 a year — and reduce child poverty in Oregon by 49%.

Supporters include the Oregon Progressive Party and the Oregon Working Families Party. Two tenant rights organizations in Oregon also supported the measure: Community Alliance of Tenants and Portland Tenants United.

“This discount provides immediate relief in a volatile and often predatory housing market. For too many, a $1,600 check is the difference between a stable home and homelessness,” said Kim McCarty, executive director of the Community Alliance of Tenants, in a news release.

Yes, 118 organizers say the measure would strengthen financial security in the state. They also object to the claim that the discount would affect the overall fund. Implementation would be covered by the new revenue and lawmakers could pass legislation to address any concerns, they say.

The Oregon Rebate PAC reported two $100,000 foreign donations in September in support of Measure 118 from Jones Holding LLC (owned by tech entrepreneur Joshua Jones). Jones has also contributed more than $600,000 through multiple donations since 2023. San Francisco mayoral candidate Dylan Hirsch-Shell also contributed $100,000. Both are supporters of universal basic income.

Dianne Lugo covers Oregon legislative and justice issues. Reach her at [email protected] or on X @DianneLugo

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