Portland, Oregon, is renowned for its vibrant art scene, breweries, and the world’s largest bookstore. However, it’s also infamous for its high taxes. The city’s residents face some of the highest tax rates in the country, with city, county, regional, and state taxes combining to create a significant tax burden. This burden is spread across numerous taxes, making it challenging to appreciate the full extent of the tax obligations unless you’re the one paying them.
Portland’s tax burden is particularly heavy on businesses. The city has the highest business taxes in the country, affecting both small and large businesses, as well as pass-through businesses and corporations. The top marginal rates for wage income, S corporations, partnerships, LLCs, and C corporations in Portland are among the highest in the nation, surpassing those in New York City, San Francisco, and other states.
Individuals and businesses in the Metro region face a complex array of taxes on income. These include the state’s Personal Income Tax, Corporate Income Tax, and Corporate Activity Tax, as well as local taxes such as the Preschool for All Tax, Business License Tax, Business Income Tax, Supportive Housing Services Tax, TriMet Transit Tax, and Oregon Transit Tax. Each of these taxes contributes to the overall tax burden faced by Portland residents.
For instance, Oregon’s state tax on individual and pass-through business income is the nation’s sixth highest, with a top rate of 9.9 percent. However, this rate kicks in at $125,000 for single filers, a much lower threshold compared to other states with high tax rates. At this income level, Oregon’s marginal rate is the nation’s highest, even before considering additional levies.
On the business side, Oregon’s 7.6 percent corporate income tax is high, ranking 14th highest nationwide. However, Oregon is one of only two states to impose both a corporate income tax and a gross receipts tax on business income. The state’s Corporate Activity Tax is a gross receipts tax, imposed on businesses’ gross rather than net income. This tax structure leads to higher marginal rates on the profits of low-margin businesses than high-margin ones and results in tax pyramiding, as the tax is imposed at every level of the production chain.
In conclusion, Portland’s high tax rates and complex tax structure place a significant burden on its residents and businesses. Understanding these taxes and their implications is crucial for making informed financial decisions and fulfilling tax obligations.