SALEM, Ore. (PORTLAND TRIBUNE) �?A proposed business sales tax could generate nearly $6 billion in state revenue by 2019, but it might also dampen income, employment and population growth during the next five years, according to state analysis of the initiative that likely will be on the November general election ballot.

“We don’t have any delusions. We know this wont�?be the final word on it,�?Legislative Revenue Officer Paul Warner said Monday morning. “We know there will be a lot more work and analysis to do, but hopefully this will be a starting point.�?

Known as Initiative Petition 28 (IP 28), the proposed gross receipts tax measure backed by labor unions and others around the state would increase the corporate tax by 2.5 percent on annual sales above $25 million. It could raise taxes less than 1,000 of Oregon’s nearly 30,000 registered corporations. It also would tilt the tax burden from individual households onto large corporations.

The initiative would not affect the taxes paid by thousands of small corporations in the state, which now pay a minimum tax on their sales.

It would, however, be the largest tax increase in state history.

An analysis if IP 28 by Oregon’s Legislative Revenue Office presented Monday morning to the Senate Interim Committee on Finance and Revenue in Salem, showed the measure to increase some taxes on corporations would stabilize the state’s budget. At the same time, the costs of the tax would likely trickle down to consumers, increasing prices on daily items and slow private sector job growth in the next five years.

A household with median income of $51,075 would lose an estimated $613 in income in the form of higher prices and slower economic growth, the report shows.

The proposal also would give Oregon the ninth highest business tax burden in the nation, according to the analysis. Right now the state has the 26th highest business tax.

“If it were in place for the 2012-13 fiscal year (the most recent year with complete state-by-state census data), IP 28 would have increased Oregon’s per capita state and local tax burden by roughly $600 to $4,501,�?according to the state analysis. “At this level the state could have had the 20th highest per capita tax burden in that year compared to an actual rank of 28th. As a percent of income IP 28 would have raised taxes from an actual 10.1 percent in 2012-13 to 11.6 percent. This would have moved Oregon to the ninth highest taxes as a percent of income versus an actual ranking of 26th.�?

The heaviest impact from the tax would fall on wholesalers who would have to pay the tax at least two levels, Warner said.

The union-backed campaign, Our Oregon, submitted 130,000 signatures in support of the measure to the secretary of state’s office Friday for verification. Only 88,184 are needed to qualify for the November ballot.

Campaign spokeswoman Katherine Driessen said the analysis by the Legislative Revenue Office gives an inaccurate picture of what the tax would do.

The Legislative Revenue Office “couldn’t model IP 28, so they, instead, applied a lower rate to all businesses,” Driessen said. “Of course, what IP 28 would really do is apply a 2.5 percent rate on sales above $25 million to fewer than 1,000 corporations. We appreciate the hard work that went into the report, but I think that’s a very important distinction to note.”

Warner was not immediately available to respond to Driessen’s assertion that IP 28 was not modeled in the analysis.

Pat McCormick, a spokesman for a coalition of 500 businesses opposing the measure, disputed Our Oregon’s claim.

“This was specifically about IP 28,” McCormick said. “We have great confidence in the capability of the LRO to accurately present information with the best possible modeling, and they spent years building this model to accurately represent the state’s economic structures.”

“The impact on the economy is going to be very difficult on Oregonians, tespecially those who are unable to bear those costs,” he added. “All of the aspects of the economic impact on those most struggling in our economy and the impact overall on the economy, the loss of jobs and so forth is of significant concern.�?

Lawmakers in the Senate have been interested in offering an alternative to the tax measure during February’s session but have encountered resistance from the House.

Sen. Mark Hass, D-Beaverton, chairman of the interim committee hearing the analysis Monday, proposed a smaller tax on corporations in February, but his bill never gained traction.

On Monday, he renewed his call to lawmakers to offer an alternative to the tax.

“There will be potent forces at work here to keep it from passing so that $6 billion could be zero, and yet our revenue issues will remain When I look at this and �?the regressive nature it makes me th if we can do this and guarantee revenues 1without that force without that fight why wouldn’t we do that We can do thatI know members of this committee would like to do that without going to a world war�? I know we need other p to try to come together to try to do this Kotek, governor, lobbyists …We can do this and try to avoid this divisive fight in th fall. The last thing the state needs is a bitter campaign.

House Speaker Tina Kotek, D-Portland, made it clear at the end of the session that she supports the measure. Gov. Kate Brown has not taken a strong position on the measure or offered to negotiate an alternative. On Monday, she indicated her focus is now on making sure revenue from the tax goes to education.

“I greatly appreciate the analysis provided by the Legislative Revenue Office, which helps inform our understanding of the impacts of IP-28,” Brown said in a statement. “As I have said previously, the problem I remain focused on is how to improve our graduation rate and fund essential services while sustaining economic growth and protecting Oregon jobs. I will begin discussions with my legislative colleagues about a way forward that, should the measure pass, would safeguard new revenue for education while sustaining economic growth and protecting Oregon jobs.”

Any compromise that comes at this stage could dampen the campaign for the measure, but it would do nothing to keep the measure off the ballot. Once signatures are verified, the measure cannot be withdrawn.

The Portland Tribune is a KOIN media partner.