NCPA - National Center for Policy Analysis

WASHINGTON BUSINESSES MORE HIGHLY TAXED THAN OREGON FIRMS

February 1, 2010

As Washington lawmakers consider the message from Oregon, they should consider an often overlooked difference between the two state tax structures.  Washington relies much more heavily on business taxes than does Oregon, a fact that may have played into voter willingness to boost business taxes, say the Washington Alliance for a Competitive Economy (WashACE). 

A study released by the Council on State Taxation last year makes the difference clear (Table 7, page 15): 

  • In Washington, businesses pay 51.3 percent of all state/local taxes, with a total business tax burden claiming 5.5 percent of Gross State Product.
  • Oregon businesses pay just 38.2 percent of state/local taxes for 3.7 percent of GSP.
  • Nationally, the business share of state/local taxes is 44.1 percent and the share of GSP paid by business in taxes is 4.9 percent.  

The 2002 Tax Structure Study Committee noted Washington's high reliance on business taxes: 

  • Washington's tax system places a relatively high tax burden on low profit margin firms mainly because of the business and occupation tax.
  • Due to the business and occupation tax, low profit margin firms and firms that are new or expanding may suffer a competitive disadvantage compared to their competitors in other states.  

Firm location studies show that taxes matter in location decisions when other factors are equal, says WashACE.  

Oregon, with an unemployment rate of 11 percent compared with Washington's 9.5 percent, chose to boost taxes on job creators, a category that includes wealthy individuals as well as businesses.  It is doubtful that they've helped their economy much, says WashACE. 

Source: Report, "Washington Businesses More Highly Taxed than Oregon Firms," Washington Alliance for a Competitive Economy, January 28, 2010. 

For text:

http://www.washaceblog.com/2010/01/washington-businesses-more-highly-taxed-than-oregon-firms.html  

For Council on State Taxation study:

http://www.cost.org/WorkArea/DownloadAsset.aspx?id=72320  

For 2002 Tax Structure Study Committee report:

http://dor.wa.gov/content/aboutus/statisticsandreports/wataxstudy/final_report.htm 

 

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