As an update to our article “Oregon Considering Tax Rate Hikes That Would Apply Retroactively,” in last month’s edition of the SALT Shaker, Oregon voters have approved ballot measures that will increase the corporate income tax rate, the personal income tax rate, and the minimum tax on corporations. The rate increases apply retroactively with all changes effective for tax years beginning in 2009. The corporate minimum tax, which had been $10, is now based upon a sliding scale that ranges from $150 to $100,000, depending on the sales of the filing group. The top corporate tax rate is increased by 1.3% to 7.9%, and the top marginal rate for personal income tax is increased to 11%, resulting in Oregon having one of the highest personal income tax rates in the nation.

While, as we discussed last month, this retroactive tax increase may satisfy procedural due process, it will create added complexity for financial reporting purposes. What remains to be seen, as states dig deeper into sofa cushions for more revenue, is whether this retroactive tax increase is a one-time act of desperation or the beginning of a trend.