Oregon House Passes $1 Billion Tax On Businesses

The Oregon House has passed a bill to raise $1 billion dollars a year for schools by imposing a gross receipts tax on businesses that make more than $1 million dollars a year.

“The Student Success Act is an unprecedented opportunity to give our children the well-rounded education they deserve,” said Joint Committee on Student Success Co-Chair Rep. Barbara Smith Warner (D-Portland). “Today marks a turning point for our state. After decades of disinvestment in our schools, we took a huge step toward fulfilling an overdue promise to our children.”

The Student Success Acts establishes the Student Success Fund which will be strictly dedicated to supporting Oregon’s public early childhood education and kindergarten through 12 system.

The Student Success Act will create unprecedented investment in early childhood education, make accountable investments for all school districts, build a more equitable education system and provide additional services that students need to succeed. Among the specific initiatives targeted by the legislation are smaller class sizes, full funding of career and technical education (Measure 98), increased access to high quality preschool and early childhood programs, universal access to meals and mental and behavioral health supports.

“Teachers give the very best of themselves to their students day after day. They are strong, compassionate, capable and extremely challenged by our lack of resources,” said Rep. Courtney Neron (D-Wilsonville). “For the educators and education advocates who are demoralized and feel unheard, I believe the Student Success Act will provide much needed relief. For the students who are at the mercy of our vote, I believe this will provide hope, and opportunity for a better future.”

The entire proposal will be a funded through a Modified Corporate Activities Tax (MCAT), developed in consultation with businesses large and small across the state. The MCAT is expected to yield $2 billion dedicated to education per biennium beginning in 2021. The legislation also includes a personal income tax cut for all Oregonians.

“This bill is the product of negotiation and compromise,” said Rep. Nancy Nathanson (D-Eugene). “This is what we strive for and what our constituents expect of us. We listened to each other throughout this process, finding common ground between the business and labor communities in the interest of a dedicated revenue source for our children’s education.”

Accountability and transparency are central components of the Act. Schools will have performance targets to improve student outcomes including improving graduation rates, third grade reading levels, the rate of ninth grade students on track to graduate, and student attendance. Schools that do not meet their performance targets will receive coaching and enhanced oversight. The lowest performing schools will get additional funding and Student Success Teams will help redirect their investments toward proven strategies. These schools will be regularly audited to ensure strategic investments are going into the classroom and money is being spent to improve outcomes.

Equity is a central component of the Student Success Act. The Act will make unprecedented targeted statewide investments in culturally specific supports for historically underserved students, special education services, and funding universal access to nutrition. Schools will also have performance targets to reduce opportunity gaps for historically underserved students to ensure that all new investments are building the equitable education system that Oregon’s students deserve.

“One common theme we heard on the Student Success tour was that we needed to build a more equitable public education system,” said. Rep. Diego Hernandez (D-Portland). “The reality is, some communities have been historically marginalized and we see the outcomes and disparities. We must address these inequities so that every student has the opportunity to succeed.”

All House Republicans opposed the bill. Representative Carl Wilson said, "It has no cost containment, but certainly a whole lot of revenue." Representative Werner Reschke said, "There's a fallacy going on here today and the fallacy is more money is the answer." Representative Daniel Bonham says "Working families will face increased costs of housing, utilities, clothing, coffee, restaurant food and diapers."

The bill only exempts food and gas from the tax.

The legislation, which passed 37 to 21, now goes to the Oregon Senate for consideration.

Unified Business Oregon opposes the bill. “Voters at the ballot just a few years ago resoundingly voted against this type of tax measure and lawmakers in Oregon just aren’t listening. Small and local businesses can’t absorb this tax on top of a two-percent sales tax on their healthcare premiums, in addition to another minimum wage increase coming in July, and a proposed carbon tax that will drive up gas prices,” said Lou Ogden, UBO Executive Director. “Worse, because of the way this bill was crafted, behind closed doors with some of the largest and wealthiest special interests in the state, the largest corporations who sell their goods and services out of state won’t be paying much, if any, of this new tax increase.”

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