ORIENTATION

 BILL INTRODUCTION:  LC 1033, LC 1034,

 LC 1777

 

TAPE 19-20, A-B

 

HOUSE REVENUE COMMITTEE

JANUARY 28, 2003   8:30 AM   STATE CAPITOL BUILDING

 

Members Present:                        Representative Lane Shetterly, Chair

                                                Representative Wayne Scott, Vice Chair

                                                Representative Joanne Verger, Vice Chair

                                                Representative Phil Barnhart

                                                Representative Vicki Berger

                                                Representative Pat Farr

                                                Representative Mark Hass

                                                Representative Elaine Hopson

 

Members Excused:                      Representative Max Williams

 

Invited Witness Present:                        Debra Buchanan, Department of Revenue

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Lizbeth Martin-Mahar, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 19, SIDE A

 

004

Chair Shetterly

Calls meeting to order at 8:32 a.m.

 

 

005

 

014

Martin-Mahar

 

Martin-Mahar

Presented Overview on 2003 Corporate Excise Taxes, (Exhibit 1)

 

Continued presentation, beginning “Oregon Income Taxes, (Page 1, Slide 1, Exhibit 1).

 

034

Martin-Mahar

Continued presentation, beginning “Business Income Tax Returns”, (Page 1, Slide 2, Exhibit 1).

 

Questions and discussion interspersed.

 

127

Chair Shetterly

Clarifies when looking at numbers between taxes paid as business income and personal income in Oregon, a significant share of business income is reflected in the personal income tax numbers, because of the number of pass through entities.

 

133

Martin-Mahar

Continued presentation beginning “Business Tax Returns by Income”, (Page 2, Slide 3, Exhibit 1).

 

178

Martin-Mahar

Continued presentation, beginning “Business Income ($)000) By Business Type 1990 and 2000, (Page 2, Slide 4, Exhibit 1).

 

202

Martin-Mahar

Continued presentation, beginning “Business Income Statement, (Page 3, Slide 5, Exhibit 1).

 

242

Martin-Mahar

Continued presentation, beginning “Business Income Statement, Slide 6, Exhibit 1).

 

265

Martin-Mahar

Continued presentation, beginning “Range of State Corporate Income Tax Rates (%) – 2002 (Page 4, Slide 7, Exhibit 1).

 

291

Martin-Mahar

Continued presentation, beginning “Corporate Tax Credits Used”, (Page 4, Slide 8, Exhibit 1).

 

Questions and discussion interspersed.

 

364

Martin-Mahar

Continued presentation, beginning “Corporate Excise Tax”, (Page 5, Slide 9, Exhibit 1).

 

 

TAPE 20, SIDE A

 

001

Martin-Mahar

Continued presentation, beginning “Multi-State C-Corporations Percent of Total Returns and Net Income 1990-2000.(Page 5, Slide 10, Exhibit 1).

 

Questions and discussion interspersed.

 

018

Martin-Mahar

Continued presentation, beginning “Breakdown of C-Corporate Returns by Income”, (Page 6, Slide 11, Exhibit 1).

 

Questions and discussion interspersed.

 

033

Martin-Mahar

Continued presentation, beginning “Breakdown of C-Corporate Net Income by Income”, (Page 6, Slide 12, Exhibit 1).

 

063

Martin-Mahar

Continued presentation, beginning “Corporate Tax Returns and Net Tax – 2000” (Page 7, Slide 13, Exhibit 1).

 

075

Martin-Mahar

Continued presentation, beginning “Corporate Income and Excise Tax Payments Index of 12 Month Total”, (Page 7, Slide 14, Exhibit 1).“

 

Questions and discussion interspersed.

 

120

Martin-Mahar

Continued presentation, beginning “Industry Sectors with a Decline (>$41million) in Corp Payments Between July 2001 and Nov 2002”, (Page 8, Slide 15, Exhibit 1).

 

Questions and discussion interspersed.

 

159

Martin-Mahar

Continued presentation, beginning “Oregon Income Taxes”, (Page 8, Slide 16, Exhibit 1).

 

203

Martin-Mahar

Continued presentation, beginning “Multi-State Income Apportionment”, (Page 8, Slide 17, Exhibit 1).

 

224

 

 

Martin-Mahar

Continued presentation, beginning “State Apportionment Formulas – 2002””, (Page 9, Slide 18, Exhibit 1).

 

Question and discussion interspersed.

 

249

Martin-Mahar

Continued presentation, beginning “Apportioning Business Income:  Multistate Corporation “A”, (Page 10, Slide 19, Exhibit 1).

 

Question and discussion interspersed.

 

 

320

 

 

Martin-Mahar

Continued presentation, beginning “Sales Throwback Rule” (Page 10, Slide 20, Exhibit 1).

 

Questions and discussion interspersed.

 

 

TAPE 19, SIDE B

 

029

 

Martin-Mahar

Continued presentation, beginning “”Double-Weighted Sales”, Page 11, Slide 21, Exhibit 1).

 

Questions and discussion interspersed.

 

085

 

 

Martin-Mahar

Continued presentation, beginning “”Super-weighted Sales”, Page 11, Slide 22, Exhibit 1).

 

Questions and discussion interspersed.

 

134

 

 

 

139

Debra Buchanan

 

 

 

Buchanan

Presented Overview of Administrative issues at the Department of Revenue, focusing on nexus and the unitary requirements. (Page 1, Slide Top, Exhibit 2).

 

Continued presentation, beginning “Jurisdiction to Tax”, (Page 1, Slide Bottom, Exhibit 2).

 

144

Buchanan

Continued presentation describing Oregon diagram showing non-taxable income from a company that headquarters in Seattle with factory and sales in Washington only, (Page 2, Slide Top, Exhibit 2).

 

150

Buchanan

Continued presentation, describing diagram with corporation engaging in activity outside of Washington and in Oregon, (Page 2, Slide Bottom, Exhibit 2).  Question in administering public tax becomes: how much activity, what type of activity and how substantial is the activity?

 

156

Buchanan

Continued presentation, beginning “Commerce Clause”, (Page 3, Slide Top, Exhibit 2). (Page 3 slides discussed out of order.)

 

159

Buchanan

Continued presentation on “Due Process Clause (Page 3, Slide Bottom, Exhibit 2). (Page 3 slides discussed out of order.)

 

180

Buchanan

Continued presentation, diagram of company with nexus established between Washington and Oregon, (Page 4, Slide Top, Exhibit 2).

 

198

Buchanan

Continued presentation, with a Washington corporation, with no physical site, but employees and product being sold in Oregon, (Page 4, Slide Bottom, Exhibit 2).

 

204

Buchanan

Continued presentation, beginning “P.L. 86-272”, (Page 5, Slide Top, Exhibit 2).

 

234

Buchanan

Continued presentation, beginning “What is not Protected Activity”, (Page 5, Slide Bottom, Exhibit 2).

 

240

Buchanan

Continued presentation, diagram of not protected activity (Page 6, Slide Top, Exhibit 2).

 

Questions and discussion interspersed.

 

362

Buchanan

Continued presentation, diagram of Oregon corporation doing business out-of-state” (Page 6, Slide Bottom Exhibit 2).  Demonstrates throwback rule.

 

405

Buchanan

Continued presentation, beginning “Unitary vs. Separate Reporting” (Page 7, Slide Top, Exhibit 2).

 

426

Buchanan

Continued presentation, diagram (Page 7, Slide Bottom, Exhibit 2).

 

TAPE 20, SIDE B

 

005

Buchanan

Continued presentation, diagram (Page 8, Slide Top, Exhibit 2).

 

008

Buchanan

Continued presentation, beginning “Advantages and Disadvantages”, (Page 8, Slide Bottom, Exhibit 2).

 

012

Buchanan

Continued presentation, diagram, (Page 9, Slide Top, Exhibit 2).

 

 

 

030

 

 

Chair Shetterly

Questions and discussion interspersed.

 

Concludes corporate tax overview, begins discussion of bill introduction.

 

 

INTRODUCTION OF BILLS

 

044

 

 

 

 

067

 

 

 

 

070

 

 

077

Chair Shetterly

 

 

 

 

Chair Shetterly

 

 

 

 

Chair Shetterly

 

 

Chair Shetterly

Bills for intro LC 1033, relates to a reduction in the capital gains tax; LC 1034, expansion of the research and development tax credit; and LC 1777, establishes a municipal street tree restoration program in the state forestry department.   

 

MOTION:  CHAIR MOVES INTRODUCTION OF LC 1033 AT THE REQUEST OF ASSOCIATED OREGON INDUSTRIES, LC 1034 AT THE REQUEST OF ASSOCIATED OREGON INDUSTRIES, AND LC 1777 AT THE REQUEST OF OREGON COMMUNITY TREES.

 

Clarifies the bills are entered as Committee Bills, but do not indicate support or opposition by the members of the Committee.

 

ORDER:  THERE BEING NO OBJECTION, THE CHAIR SO ORDERS.  Members present:  Chair Shetterly, Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger.  Excused:  Williams.

 

 

 

Meeting adjourned at 10:00 a.m.

 

Tape Log Submitted by,

 

 

Kathy Tooley, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.       Martin-Mahar, “2003 Corporate Income Tax Orientation”, 11 pages.

2.       Buchanan, “Administrative Issues in the Corporate Tax System”, 9 pages.

3.       Chair Shetterly, LC 1033, at the request of Associated Oregon Industries, 10 pages