Portland City Council Proposes “Fair Share Tax” on Large Corporations
Overview
Portland City Council is reviewing a proposal to raise taxes on large corporations with high CEO pay compared to their median workers, while simultaneously providing tax relief for small businesses. This initiative, referred to as the “Fair Share Tax,” aims to enhance the existing CEO Pay Ratio Surtax, targeting publicly traded companies with significant pay disparities.
Current Policy
Currently, companies with CEOs earning at least 100 times more than their median workers face a 10% additional city business tax, increasing to 25% for those with pay ratios exceeding 250 times. The proposed changes suggest a maximum surcharge of 500% for companies where the CEO earns at least 500 times the median worker’s pay.
Financial Implications
- Example: A company owing $100,000 in business taxes could face an additional $500,000 in the highest tax bracket.
- The proposal could affect around 400 corporations and is estimated to generate approximately $88 million annually, while the increased small-business exemption would reduce revenue by about $16 million, netting an estimated $72 million.
- A city economist projects a more conservative estimate of $33.4 million in net annual revenue.
Small Business Tax Relief
The proposal includes raising the small-business tax exemption threshold from $75,000 to $500,000 in gross receipts. This change could exempt as many as 18,000 smaller businesses from the business tax, providing an average savings of about $900 annually.
Council Debate
The proposal has elicited mixed responses among council members:
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Supporters:
- Councilor Angelita Morillo emphasized the need for increased revenue after prior budget cuts.
- Supporter Mitch Green highlighted benefits for public services and financial stability.
- Councilor Candace Avalos underlined the positive impact on struggling immigrant-owned businesses.
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Opponents:
- Councilor Loretta Smith warned that increased taxes might deter investment and job retention.
- Councilor Dan Ryan expressed concerns about the unintended consequences where high taxes could indirectly hurt small businesses reliant on larger corporations for customer traffic.
Next Steps
The council meeting on Thursday focused on public testimony rather than a final vote. Discussions will continue next week, with a potential vote on advancing the proposal anticipated in November or December. Council President Jamie Dunphy rebutted concerns about corporations leaving the city, asserting that prior threats of departure haven’t materialized.
The ongoing discussion reflects the city’s efforts to balance fiscal responsibility while addressing equitable business practices.
