The Effects of Measure 118 to the Construction Industry: Defeat The Costly Tax on Sales
A group of California pro-tax activists are promoting a drastic $6.8 billion dollar tax increase measure that recently qualified for Oregon’s 2024 statewide ballot in November. If approved by voters, Measure 118 would implement the largest tax increase in Oregon history—hurting Oregon’s economy and driving up costs for Oregon businesses and consumers at the worst possible time.
Measure 118 Would Implement a Massive Tax on Sales
Measure 118 is basically a gross receipts tax on businesses with more than $25 million in annual sales. In other words, it’s a tax on sales—not profits. That means Oregon businesses would be forced to pay this new $6.8 Billion tax regardless of whether they make a large profit, make a small profit, or are losing money. Measure 118 would force hundreds of local businesses to raise their prices, cut jobs, or shut down completely.
A Blank Check for Salem Politicians
Despite what its promoters claim, Measure 118 does not guarantee that revenues from its massive new tax will end up in the pockets of Oregon residents. If Measure 118 passes, politicians in Salem could amend it with a simple majority vote and redirect the money anywhere they want or change who is subject to the tax, giving them a blank check, with no accountability to the public.
Pyramiding Effect on Construction
Construction is particularly impacted by the pyramiding impact of a gross receipts tax. When a material goes from the supplier to the subcontractor, to the general contractor to the owner, it is taxed at each level, drastically increasing the impact of the 3% tax increase.
Construction Second Most Impacted Industry
Measure 118 will hit construction companies particularly hard, since it is a gross receipts tax that doesn’t consider the amount of profit for the company. In many cases, the increase of 3% tax burden can have the effect of putting a company in the red. The tax will go into effect in January 2025, giving businesses no time to prepare and causing huge problems for contractors with multi-year contracts.
An official Legislative Revenue Office report finds that construction will be the second most impacted industry in the state, with an estimated tax increase of 964%. Even this large number likely underestimates the total impact, since it only looks at C-corps and Scorps. It doesn’t account for the impact to all the other companies in the construction industry that will be impacted by the pyramiding effect.
Legislative Revenue Office, “Initiative Petition 17: A Description and Preliminary Analysis”
Join Our Coalition Urging NO On Measure 118
A statewide coalition of large and small Oregon businesses, organizations, taxpayers, consumers, and community leaders from across the state is coming together to oppose Measure 118. Visit NOonMeasure118.com.
- Get the facts on Measure 118
- Preliminary Analysis from Legislative Revenue Office
- Support the opposition campaign
Additional Links
- Common Sense Institute: A Seismic Change to Oregon’s Tax System
- OP-ED: For Most Oregonians, Measure 118’s Costs Could Outweigh Gains
- Common Sense Institute Report on BM 118
For more information on Measure 118 and the impact on construction, please contact:
- Dan Drinkward, Hoffman Construction: daniel-drinkward@hoffmancorp.com
- Paul Schulz, Pence Construction: paul@pence.net
- Kirsten Adams, AGC: kirstena@agc-oregon.org