AN OVERVIEW OF OREGON CORPORATE EXCISE AND INCOME TAXES and other business taxes Legislative Revenue

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AN OVERVIEW OF OREGON CORPORATE EXCISE AND INCOME
TAXES(and other business taxes)Legislative
Revenue OfficeJanuary 2007
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• Common Terms
• Tax Liability
• Tax Collections
• Apportionment
• Credits
• Business Taxation

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Corporate Tax Terms

• Excise Tax vs. Income Tax
• Unitary reporting requirement
• Apportionment vs. Allocation
• C-corporation vs. S-corporation
• Carry-back vs. Carry-forward

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Tax Liability
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STATES CORPORATE TOP TAX RATES () Tax Year
2006 indicates a state with multiple tax rates
OREGON
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History of Corporate Tax Liability
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Annual Change in Tax Liability(Without Kicker)
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Top 10 (Tax) Largest Industry Sectors (2004)
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Number of C-Corporations with Positive Taxable
Income (Tax Year 2004)
Total Number of Returns 12,273
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Tax Liability of C-Corporations with Positive
Taxable Income (Tax Year 2004)
Total Tax Liability 309 million
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Average Net Tax (2004)
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C-Corporate Returns By Income Group
(000s)(Oregon Only and Multi-State - 2004)
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C-Corporate Liability By Income Group
(000s)(Oregon Only and Multi-State - 2004)
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(No Transcript)
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Tax Collections
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History of Corporate Tax Collections
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Annual Change in Tax Collections
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(No Transcript)
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Collections for Selected Sectors12-Month Moving
Totals
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Dollar Change (M) and Percent Change in
Collections for Selected Sectors (FY01 to FY06)
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Collections for Tax Year 2004
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Collections for Tax Year 2001
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Collections for Tax Year 2006
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Collections for Tax Year 2006
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Multi-State Apportionment
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Multi-state Income Apportionment

• 47 states have Corporate Income Tax

• 10 use equally-weighted formula

• 16 use double-weighted sales

• 7 use between 50 and 90 sales

• 6 use 100 sales

• 8 use hybrid system (4 w/ 100 sales)

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Oregons Apportionment Formula

• Applies only to multi-state corporations
• 21 of all corporations in 2004
• Roughly 12,000 C-corporations and 5,600
  S-corporations
• Three Exceptions to SSF
• Insurance companies use equal-weighted formula
• Utilities and Telecom. corporations may use
  double-weighted sales factor
• Certain wood products corporations must use
  double-weighted sales factor

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Corporations Affected by Single Sales Factor
(2004 Number and Tax)

• All Corporations 83,704 311.3
• Less Oregon-only 66,174 42.5
• Less Multi-State Ins. Cos. 1,130 32.1
• Less Multi-State S-corps 5,637 1.0
• Less Multi-State C, min tax 6,521 0.1
• Equals Corps Affected 4,242 235.7

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Apportioning Business Income Multi-state
Corporation A
Total Net Income 5 million Oregon 5
million x 30 1.5 million California 5
million x 70 3.5 million
Oregon Tax 1.5 million x 6.6 99,000
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Impact of Changing From A Double To A Single
Sales Factor
Company A Net Income 5 million Double
Sales 5 million x 27.5 1.375 million
Single Sales 5 million x 20.0 1.0 million
Company B Net Income 5 million Double
Sales 5 million x 42.5 2.125 million
Single Sales 5 million x 50.0 2.5 million
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The Impact of the Single Sales Factorby income
class, tax year 2004
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Impact on Tax (2004) if SSF
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The Impact of the Single Sales FactorSelected
Sectors, tax year 2004
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Average Impact of Single Sales Factor(Tax Years
1999 to 2004)
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Credits
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Total Amount of Credits Used 1994 - 2004
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Share of Credits Used and UnusedTax Years 1998 -
2004
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Corporate Tax Credits Used
2004 37 million
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Trends in C Corporations Use of Major Tax
Credits 2001-2004
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Trends in C Corporations Unused Tax Credits
2001-2004
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Business Income Taxation

• Sole Propietors
• Partnerships
• General
• Limited Liability
• Corporations
• C-Corporations
• S-Corporations
• Limited Liability Companies

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Business Income Tax Returns
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Business Income by Business Type (000s)
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Percent of Total Returns by Income Group and
Business Type Tax Year 2004
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Number of C and S Corporations by Industry Tax
Year 2004
Total C corps 33,688 Total S corps 50,018