On petitions to review ballot title filed November 7, 2013, considered and under advisement on December 17, 2013.
Steven C. Berman, Stoll Stoll Berne Lokting & Shlachter, PC, Portland, filed the petition for review and reply for petitioner McCann.
Jill Gibson Odell, Gibson Law Firm, LLC, Portland, filed the petition for review for petitioner Harmon.
Judy C. Lucas, Senior Assistant Attorney General, Salem, filed the answering memorandum for respondent.
[354 Or. 703] KISTLER, J.
Petitioners McCann and Harmon seek review of the Attorney General's certified ballot title for Initiative Petition 30 (2014). See ORS 250.085(2) (specifying requirements for seeking review of certified ballot titles). We review ballot titles for substantial compliance with ORS 250.035(2). See ORS 250.085(5) (stating standard of review). For the reasons explained below, we refer the ballot title to the Attorney General for modification.
In Oregon, corporations must pay the higher of either a tax on their " taxable income" or a business minimum tax. See ORS 317.061 (imposing a tax on taxable income); ORS 317.090 (listing a schedule of taxes based on Oregon sales that, at a minimum, a corporation must pay). The term " taxable income" is a defined phrase, which essentially refers to a corporation's profits. See ORS 317.010(10) (defining " taxable income" ); Green/Harmon v. Kroger, 351 Or. 641, 644, 274 P.3d 180 (2012) (describing an excise tax on taxable income as a profits tax). The minimum tax is based on a corporation's total Oregon sales and sets the minimum amount of tax that a corporation must pay for the privilege of doing business in this state. See ORS 317.090.
Except for S corporations, the minimum tax that a corporation owes will vary depending on the corporation's total Oregon sales. ORS 317.090(2). For example, a corporation with $50 million or more in Oregon sales but less than $75 million owes a minimum tax of $50,000. ORS 317.090(2)(a)(J). A corporation with $75 million or more but less than $100 million in Oregon sales owes a minimum tax of $75,000. ORS 317.090(2)(a)(K). Finally, a corporation with $100 million or more in Oregon sales owes a minimum tax of $100,000. ORS 317.090(2)(a)(L). Because the top bracket for minimum taxes applies to corporations with $100 million or more in Oregon sales, it effectively caps the minimum taxes that corporations owe. No matter how much [354 Or. 704] a corporation's Oregon sales exceed $100 million, the corporation will never owe more than a $100,000 minimum tax.
Initiative Petition 30 (IP 30), if adopted, would change two aspects of the minimum tax. First, it would eliminate the current cap on minimum taxes by providing that, if a corporation has more than $50 million in Oregon sales, it would owe a minimum tax of $50,000 plus two percent of all Oregon sales in excess of $50 million. IP 30 would thus increase the minimum tax for all corporations with more than $50 million in Oregon sales. Second, IP 30 would reduce by half the minimum tax for corporations with Oregon sales between $500,000 and $9,999,999.
IP 30 also would eliminate any tax on profits for corporations with less than $10 million in Oregon sales. If IP 30 were adopted, those corporations would pay only a reduced minimum tax, no matter how much they earned in profits on Oregon sales and even if they would have paid a greater tax on their profits under current law.
The Attorney General certified the following ballot title:
" Modifies annual minimum tax for some corporations, depending on the amount of corporation's Oregon sales
" Result of 'Yes' Vote: 'Yes' vote will decrease annual minimum tax for some corporations, increase annual minimum tax for some corporations, ...