It's Never Enough
Oregon's new tax plan
Anthony K. Smith
Oregon State Director
National Federation of
Last month, the Oregon
Legislature passed the
Corporate Activities Tax
- a gross receipts tax on
business entities (not just
corporations) aimed at
increasing state spending
for public education by
more than $1 billion per
Important details of
the new tax plan (like the
0.57% rate) were finalized
and made public just two days before
the bill passed the House on a party-line
Republican state senators delayed the vote
in the Senate by avoiding a week's worth of
floor sessions, but in the end, the bill passed
the Senate, less than two weeks after the
House vote, again on party lines.
Just three days later, HB 3427 was signed
into law by Gov. Kate Brown.
Barring a successful referral campaign,
starting in 2020, Oregon will begin taxing
businesses with $1 million or more in
Oregon sales, whether they make a profit
or not. Companies that make huge profits
will pay the tax - so will those that break
even. Most egregiously, companies that lose
money (like start-ups) will also pay the tax.
They might even owe the state the same, or
more, in new taxes than the company with
Oregon's new tax policy completely removes
profit from the equation. Ironically,
not-for-profit businesses (and other nonprofit
organizations) are exempt from the
For politicians to take such extreme measures
-- to not just raise taxes, but to change
the way we tax businesses -- they must not
have had any other choice, right?
Why pass a regressive tax that hurts low income
families the most when just a few
short years ago, voters soundly rejected a
gross receipts tax?
* The state budget must be in bad shape.
* Tax collections must be sharply down.
* We must have been facing massive
cuts to key public services.
Wrong. The funds generated by the new
Corporate Activities Tax are earmarked for
new public education spending. New spending
- not budget hole filling.
And if you're in the business of advocating
for increased state spending on education,
or anything else for that matter, it's a very
good thing that the Legislature passed HB
3427 when it did.
Two days after the bill passed in the Senate
- the day before Gov. Kate Brown signed
it, state economists from Oregon's Office of
Economic Analysis presented the quarterly
revenue forecast to members of the Legislature's
revenue committees. Every forecast is
critical to understanding the financial situation
of the state, but the May forecast (in
odd-numbered years) is especially important
because those revenue projections help
build the state's next two-year budget.
Let's rewind for a moment - we're nearing
the end of the 2017-2019 biennium.
The original 17-19 close of session (COS)
projection for net general fund and lottery
resources was about $21.4 billion. Fast
forward back to today, the May 2019 forecast
shows that the state is now expected
to bring in a total of $23.8 billion!
That's $2.4 billion more than was expected. When
asked what happened, the state economists
attributed the sharp increase to the federal
Tax Cuts & Jobs Act of 2017.
Luckily for taxpayers (and woe to taxand-
spenders) $1.4 billion is now headed
back into their pockets because of Oregon's
Kicker law. When revenues exceed 2% of
what's expected to come in, personal income
tax filers receive a credit toward their
next-year's state income tax liability. That
$1.4 billion figure translates to about 7.6%
above original COS projection for the end
of the 17-19 biennium - way above the 2%
threshold that "kicks" the kicker.
However, that wasn't the only big news
from the May revenue forecast. Not only
will Oregonians receive the largest kicker
in history, but the state is now projected to
have more than $700 million in additional
revenue available for the upcoming 19-21
biennium. Since this announcement, the
Capitol has been abuzz with lobbyists trying
to score that "new money" for their favorite
The bottom line is Oregon has never
brought in more tax revenue than it's currently
bringing in - and that was before the
addition of the Corporate Activities Tax's
billions. Will it be enough? No, it's never
enough. The calls for higher taxes and increased
spending will start up again very
soon in Salem, if they haven't started already.
Anthony K. Smith is Oregon state director
for the National Federation of Independent
Junkyard Rides Food Channel Fame
Into the Franchise Arena
When Guy Fieri and his Diners Drive
Ins and Dives Crew pulled into Lancaster
Oregon, Population 20, he wasn"t
disappointed, what he found was an Urban
Legend. Founders Craig and Kim created a
menu and experience that lead Guy to say in
conversation, "You might want to consider a
Multiple Location Operation or Franchising
this Concept! Several years later JunkYard
Extreme Burgers and Brats, is proud to
announce the Franchising of the business.
Most days in Lancaster, motorist race by
at 60 miles per hour and catch a glimpse of
people standing in line at the ridiculously,
themed restaurant with an airplane on the
roof. Junkyard does not advertise because
customers do it for them. A Junkyard is a
billboard on its own and to this day the Food
Channel reruns the episode almost every
month worldwide. You build it they will
Co-founder Craig Zumwalt credits his wife
and business partner Kim for the Incredible
Menu of Burgers, Brats, Franks, Fries,
Fried Cheese Pizza and more. Together they
created a methodology that is pinnacle to
the JunkYard brand. According to Zumwalt,
the beauty of owning a Junkyard Extreme
Burgers and Brats is difference with a capital
D. It"s the WOW Factor!
It"s not just one off creations, theme, or
decor, moreover its the hundreds upon
hundreds of Foodies who tirelessly drive
from all parts of the country to declare our
idea of a reinvented Burger, Dog, Sausage
the BEST they have ever had.
That makes it worth the 13 years of blood
and sweat it took to create this concept. To
lead and not follow any other. To create a bar
so high all others exist below it.
In the game of supposed gourmet, burger
joints the "Wow Factor" is a rare commodity.
Junkyards work best where Junkyards are!
No need for downtown leases, buys and
builds, or expensive advertising campaigns.
Out of the fray, a short destination...a place
where folks can sit back eat, drink and
marvel, as opposed to being led through
another cold, checkered floor norm.
For more information please visit us at www.
extremeburgers.com or contact:
Franchise Development Coordinator
The Estate Plan That You Want
Last month we
opened with the simple
observation that everyone
has an estate plan, either
the one you develop with
advisors or the one that
through lack of planning
the state government has
set up for you. We learned
that estate planning
addresses two important
issues: 1) the distribution
of your assets, and 2) your care, should you
become incapacitated or in poor health.
The focus of last month's article was on the
basic will, account titling, and beneficiary
designations. This month we will explore the
Revocable Living Trust.
A Revocable Living Trust is a legal
document created by the 'Grantor', who is
either you, or you and your spouse. Living
trusts are often used because they may allow
assets to be passed to heirs without going
through the probate process. Going through
probate is often costly (the probate courts,
in some states, charge a fee based on a
percentage of the net worth of the deceased),
time consuming, and public (the probate
records are available to the public, while
distribution through a trust is private).Unless
you are married and pass away residing in a
community property state, your property,
whether you have a valid will or not, will
enter probate. A court having jurisdiction of
the decedent's estate supervises probate in
order to ensure that the decedent's property
is distributed according to the direction of
his/her will and/or the laws of the state.
As the word revocable implies, once
the trust is set up it can be amended or
replaced by the Grantor during his or her
life. The trust becomes irrevocable upon
the Grantor's death and cannot be changed.
Living trusts also can be utilized to plan for
unforeseen circumstances such as incapacity
Before we continue with the description of
a living trust, let's define the parties to the
trust: The Grantor (also called the settlor,
trustor, or trust maker) is the person who
sets up the trust. An estate planning attorney
draws up the documents for the Grantor.
The Trustee is the person who will manage
the trust assets, and usually in a Living
Trust it the same person who set up the
trust, since he/she wants to manage his or
her own property. The Successor Trustee is
the person who will manage the trust assets
when the Grantor dies, or in the event the
Grantor becomes incapacitated. Upon the
Grantor's death, the Successor Trustee has
the obligation to distribute the trust's assets
according to the Grantor's instructions in
the trust instrument but does not have the
legal right to change the trust. The Successor
Trustee has the duty to manage the assets in
the estate and must do so for the benefit of
the remainder beneficiaries. At the Grantor's
death, the Successor Trustee automatically
takes over without court order, pays any
debts, expenses and taxes directed to be paid
by the terms of the written trust document,
and then distributes the property to the
trust beneficiaries, be they individuals or
To establish a basic living trust, the Grantor
signs a document called a declaration
of trust. In the document, the Grantor
typically names himself/herself as trustee,
and transfers assets to that trust. Because
the Grantor is named as the trustee, he/
she maintains full control over the assets.
Every asset that does not have a beneficiary
designation should be re-titled in the name
of the trust. Several people overlook re-titling
many of their assets, like saving accounts,
safe deposit boxes and real estate. If you as
the Grantor fail to title assets into the trust
name, the assets go through probate, one of
the things they set out to accomplish.
Depending on the complexity of the trust,
it may be advisable to use a corporate trustee
such as a bank or investment company
especially for the successor trustee position.
Corporate trustees must provide accurate
and detailed records of all transactions that
take place in the trust for however long the
trust exists. And serious thought must be
given to naming an individual or family
member as the successor trustee as they may
not have the skills to do the job necessary,
especially when it comes to managing trust
property and investments.
After the Grantor dies, the person identified
as successor trustee in the trust document
generally assumes that role. The successor
trustee transfers ownership of the assets in
the trust to the beneficiaries named in the
trust document. In many cases, the whole
process takes only a few weeks and there
are no lawyer or court fees to pay. When
all the property has been transferred to the
beneficiaries, the living trust terminates.
Next month we will finish up our primer on
estate planning with the power of attorney,
health care directives and planning for
More on The Estate Plan That You Want
The purpose of this article is to inform our readers
about financial planning/life issues. It is not intended,
nor should it be used, as a substitute for specific legal,
accounting, or financial advice. As advice in these disciplines
may only be given in response to inquiries regarding
specific situations from a trained professional. The Legacy Group, Ltd