Time to shine the light on the taxes of big corporations
March 23, 2023 | View PDF
In the current legislative session, as is the case every session, corporate lobbyists are hard at work trying to procure new tax breaks for their clients. These lobbyists representing many big corporations are going around waving a corporate-funded study claiming that business taxes in Oregon are too high.
If you are a lawmaker, you lack a key piece of information to decide whether the claims of the corporate lobby are true: how much big corporations like Amazon, Walmart, Nike, and the like pay in income taxes to Oregon. Neither lawmakers nor the public knows that information because it is secret.
This week is a good time to celebrate transparency and open government. So it’s a good moment to stress the need for Oregon to enact corporate tax transparency.
Though company-specific figures in Oregon are secret, publicly available data paints a picture of widespread tax avoidance. Take, for instance, the fact that corporate tax contributions have shrunk in relative terms. In the mid-1970s, the corporate income tax accounted for 18.5% of all income taxes collected in Oregon. That share is projected to drop to 8.7% in the coming budget period.
The reasons for relatively weak corporate income tax collections at a time when profits have been strong are no great mystery. We’ve seen a rise in the number of corporate tax breaks and subsidies over the past four decades. It is also clear that multinational corporations artificially shift profits to overseas tax havens to avoid paying taxes where those profits were earned.
Tax avoidance comes at a cost for Oregonians. When big corporations avoid taxes, it means either that there are fewer resources for schools and other essential services or that someone else — families and small businesses — foots the bill.
Corporate tax transparency would require large, publicly traded corporations to disclose information such as their Oregon sales, their Oregon property and income taxes paid, and the tax breaks they used. The benefits of transparency are many.
First, it would shine a light on how corporations avoid paying taxes. While the evidence indicates that corporate tax avoidance is common, the specifics of how they each avoid taxation is often unclear. Corporate tax transparency would reveal those specifics, helping the public and lawmakers determine whether reforms to the corporate income tax system are needed.
Second, disclosure could dissuade some corporations from engaging in aggressive tax avoidance schemes, knowing that key tax information would become public. At least, it would allow Oregon consumers to “vote with their dollars,” choosing to do business with corporations they view as supporting the common good.
Third, transparency would show what Oregonians get in return for corporate tax breaks. Oregon has enacted many tax programs intended to create jobs or incentivize investment in the state. Corporate tax transparency would show which corporations are using which tax incentives, and how much each incentive is costing the state. This would enable policymakers to determine whether these tax incentive programs are worth their cost.
Finally, it would enable policymakers to evaluate corporate claims about the impact of proposed tax changes. When lawmakers consider changes in corporate tax policy, corporate lobbyists usually claim that these will increase their companies’ tax payments enormously. Corporate tax transparency would enable policymakers to evaluate the validity of such claims.
Today, some corporations have more economic weight than entire nations. These creatures of state law — entities that exist by virtue of an act of state government — wield tremendous political power, using it to obtain tax subsidies from the public and shape legislation of all kinds. Big corporations affect the daily lives of Oregonians in countless ways.
For the well-being of our state and nation, we need greater transparency from big corporations. We need corporate tax transparency.
Juan Carlos Ordóñez is the communications director of the Oregon Center for Public Policy, as well as the host of the podcast Policy for the People.