IP 28 is Bad for Small Business. Here's Why.

Date: August 02, 2016 Last Edit: August 04, 2016

Initiative Petition 28 would harm small businesses in unexpected ways.

IP 28 is Bad for Small Business. Here’s Why

A fall ballot measure is bad news for Oregon small businesses.

Initiative Petition 28 is a proposal sponsored by the Oregon labor groups, which would impose a 2.5 percent gross receipts tax on companies that earn more than $25 million annually, drawing ire from business groups throughout the state.

A new analysis from Portland State University shows how significantly the measure would impact Oregon’s small businesses.

Although the tax is only meant to hit larger companies, “the tax impact may shift to other businesses, consumers, and other parties that are not directly assessed with the corporate tax,” according to the study’s analysis.

One way that the tax could affect small business is through a process that the study refers to as tax pyramiding. This means that small businesses that use a supply chain to get their business’ materials would be taxed through the purchases they make from wholesale retailers and other vendors they use to run their business.

These taxes would make the cost of doing business more expensive for owners, and they might have to pass those costs on to consumers in the form of price increases.

The tax is expected to particularly hurt entrepreneurs by slashing private-sector jobs but increasing the size of the state government, according to report projections. The tax is expected to cost Oregon 13,500 private sector jobs by 2027 while increasing public-sector jobs by 33,600 jobs from the increase in tax revenue, according to Oregon Business Report.

Related Content: Small Business News | Economy | Oregon | Taxes

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