Ted Kulongoski (D)

SALEM, Ore. (Legal Newsline)-Business taxes in Oregon will increase under a ballot measure handily approved Tuesday by voters." />

Oregon voters OK business tax increase

Ted Kulongoski (D)

Allen Alley (R)

SALEM, Ore. (Legal Newsline)-Business taxes in Oregon will increase under a ballot measure handily approved Tuesday by voters.

Also passed was a separate ballot measure that raises income taxes on the top 3 percent of filers.

In a statement, Democratic Gov. Ted Kulongoski said increased revenues from the measures will only help the state make ends meet.

"Even with this result, we still have some challenges before us," he said. "It is going to be a slow growth recovery from this recession for Oregon and the entire nation."

Both of the tax increases -- outlined in Measure 67 and Measure 66 -- were approved by the state Legislature, but were forced on the statewide ballot by business groups that collected signatures.

As of 8:54 p.m. and with 80 percent votes counted, Measure 67 passed with 54 percent of the vote, while Measure 66 was approved by 55 percent of voters, according to the secretary of state's Web site.

Revenues from the tax increases -- an estimated $727 million -- are aimed at protecting schools' funding and other state programs from cuts amid the Beaver State's budget woes and recession-wracked economy.

Measure 67 will amount to a $261 million tax increase for businesses in the current two-year budget cycle.

The measure replaces the state's nearly 80-year-old $10 corporate minimum tax with a graduated version that starts at $150 and go to $100,000 for those firms with in-state sales above $100 million.

Allen Alley, a republican candidate for governor, said the measure could hamper the state's economic recovery.

"Other states are waiting with open arms for the jobs that will either leave or never come to Oregon as a result of this vote," Alley said. "Taxing unprofitable businesses retroactively and permanently, as this new law does, will result in more layoffs. At a time when unemployment is already over 11 percent, this is simply wrong."

For its part, Measure 66 raises the marginal income tax on personal income above $125,000 for individuals and $250,000 for couples. The measure is expected to raise $472 million for the current two-year budget cycle.

Tuesday's vote is significant in that the last time voters in the Beaver State approved a tax increase was in 1930, when Oregonians adopted the state's income tax. With Tuesday's votes, Oregon will have the highest state capital gains tax in the United States and will be tied with Hawaii for having the nation's highest state income tax.

The measures were backed by public employee unions and Defend Oregon, which warned that the measures' defeat could mean deep cuts in state services.

Meanwhile, Oregonians Against Job-Killing Taxes, said the measures will cost jobs in the state, where unemployment is more than two percentage points higher than the national average.

In November, the Oregon Supreme Court tweaked language for the two ballot measures.

At issue were the ballot titles written by a joint Senate and House legislative committee led by Democrats. In both Measure 66 and Measure 67 there was an identical sentence: "Maintains funds currently budgeted for education, health care, public safety, other services."

Oregonians Against Job-Killing Taxes had asked the justices to remove the sentence in its entirety. Instead, the justices opted to keep the sentence while ordering that the word "maintains" be changed to "provides."

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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