Portland Fair Share Tax raises CEO surtax
Portland's proposed Fair Share Tax would increase a surtax on 405 mega corporations with high CEO pay ratios while raising the business license tax
Portland’s Fair Share Tax would increase a surtax on 405 mega corporations while exempting about 18,000 small businesses from the city’s Business License Tax. The proposal, led by City Councilors Mitch Green and Angelita Morillo, aims to generate $72 million annually to close a budget deficit and protect public services.
The measure increases the existing CEO surtax on publicly traded corporations. It also raises the Business License Tax exemption threshold from $75,000 in annual gross revenue to $500,000. Businesses doing business in Portland with sales below that new threshold would pay nothing. The official Fair Share Tax Ordinance seeks to shift the tax burden from small operators to large firms with extreme pay disparities.
Impact on corporations
The tax specifically targets publicly traded firms with wide gaps between CEO and median worker pay. Since 2016, a surtax has applied to companies where the CEO earns 100 times the median worker. The new proposal lowers that trigger to a 50-to-1 ratio and significantly increases the surtax rates.
The surtax is calculated as a percentage of a company's existing Business License Tax liability, which is 2.6% on net income for firms with revenues over $75,000. The rate escalates based on the pay ratio.
| CEO-to-worker pay ratio | Surtax percentage | Total BLT on net income |
|---|---|---|
| 50 to 75 times | 25% | 3.25% |
| 500 times or more | 500% | 15.6% |
For a mega corporation where the CEO earns 500 times the median worker, the total business tax would reach 15.6% of net income. The structure is designed to incentivize corporations to reduce pay gaps.
Revenue and equity goals
The City's Revenue Division estimates the reform will bring in a net $72 million per year. This figure is calculated as $88 million in new revenue from the expanded CEO surtax, minus $16 million lost from the small business tax cut.
This revenue is intended to shrink Portland's looming budget deficit. The Business License Tax typically makes up about one-quarter of the city’s general fund annually. Supporters argue the measure will protect essential public services that residents rely on.
Councilor Mitch Green stated that huge corporations have profited greatly from public investment and should pay their fair share to close the deficit. The proposal is framed as a response to out-of-control inequality and past federal tax breaks for the wealthy that harmed local revenues. Proponents contend the targeted corporations are so rich they will hardly notice the increase, while the change will make a significant difference for Portland's small businesses.
Councilor Angelita Morillo argued that megacorporations need to do their part, too. The tax is intended to make them pay more for their use of public infrastructure and services.
Implementation and opposition
The City Council is scheduled to discuss the proposal at the Oct. 8 meeting of its Finance and Governance Committee of the Whole. The measure faces opposition from some business groups.
Portland Metro Chamber CEO Andrew Hoan contends the tax would ultimately be passed onto consumers. He also said Portland already has the highest business and personal tax rate in the nation, expressing concern over adding to that burden.
The City Council is set to discuss the proposal at the Oct. 8 meeting of its Finance and Governance Committee of the Whole.
