Costs & Taxes | Redmond Economic Development Inc.
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Oregon has earned its reputation nationally for being a cost competitive location for business. Recent national rankings reflect an economy that balances innovation, cost-efficiency, and a favorable tax environment with quality of life.

Notably, Oregon has no sales tax, no inventory tax (a single sales factor that benefits large employers with multiple operations), and an affordable property tax system.

Average industrial, commercial, and residential power costs are 25% below the national average, and nearly half those in California. With continued in-migration, labor costs are also among the most affordable on the West Coast.

For some time Oregon has had reputable national status for being a cost competitive location for business. Recent national rankings, below, provide evidence of an economy that balances innovation, cost-efficiency, and a favorable tax environment with quality of life.  Contributing to the rankings is the fact that Oregon has no sales tax, no inventory tax, a single sales factor that benefits large employers with multiple operations, and an affordable property tax system. 

Oregon continues to see a steady improvement in its economy, particularly as employment strengthens and is projected to continue to grow and even accelerate.  In his upbeat May 2013 revenue forecast for Oregon, state economist Mark Mueller notes that the three main drags on the economy—housing, business and consumer confidence, and balance sheet positions—are all lessening.  Mueller’s improved outlook calls for increased sales and economic activity throughout the state, not just the Portland metro area.  

Average industrial, commercial, and residential power costs—nearly half those in California—are 25% below the national average.  With continued in-migration, labor costs are also among the most affordable on the West Coast.

BUSINESS COST COMPARISON – U.S. West Coast

Business Factor

Oregon

California

Washington

Average Industrial Electricity Rate (May 2018; ¢/kWh)

6.03¢

11.78¢

4.60¢

Average Industrial Rate for Natural Gas (May 2018, $/kcf)

$5.43

$7.00

$7.39

Average Annual Wage for Production Worker (Q1, 2016)

$37,460

$37,110

$44,580

Base Unemployment Insurance, range of rates  (As of July 1, 2015)

.015 – 5.4%

.016 – 6.2%

0.17 – 5.84%

State Unemployment Insurance Tax Rates (As of July 1, 2017)

(base: $38,400)

(base: $7,000)

(base: $45,000)

Min 1.2% 1.5% .13%
Max 5.4% 6.2% 7.73%

Average Annual Premium for Employer Sponsored Single Person Health Insurance (Employer Contribution,2016 data)

$4,946

$4,908

$5,449

Workers’ Comp premium index rate (as of Dec. 2016)

$1.28

$3.24

$1.97

State Individual Income Tax Rates (2016)                            

Lowest

5.0% ($0)

1.0% ($0)

None

Highest

9.9% ($125,000) 13.3% ($1,000,000)  

State Corporate Income Tax Rates (As of July 1, 2016)                           

Lowest

 6.6% ($0)

 

None

Highest

7.6% (>$1M) 8.84% ($0)  

State/local gross receipts, operations-based business tax

None

None

0.13-3.3%

State & Local Sales Tax Rates (As of July 1, 2016)

State

Local

Combined

None

None

None

7.25%

 (Average)  1.23%

8.48%

6.5%

(Average)  2.7%

9.2%

Sales or Use Taxes on Construction Costs (FY 2013)

None

4.07%

8.87%

State Sales Tax Collections Per Capita (July 1 2014)

$0

$889

$1,604

State Gasoline Tax Rates (cents per gallon) (As of Jan 2017) 

Excise tax

31.12¢

38.13¢

49.4¢

State & Local Tax Burden Per Capita (2012) US Average = $4,420

$4,094.86

$5,237.19

$4,541.48  

State Tax Collection Per Capita (2015)

$1,404

$1,451

$1,409

Real Estate Transfer Tax

None

0.110%

1.28% of sales price + local taxes

State Business Tax Climate Index (2017Tax Foundation)

#10

#48

#17

Sources: Tax Foundation, Oregon Employment DepartmentWashington State Employment Security Department, and California Employment Development DepartmentUS Energy Information AssociationEmployer Health Benefits SurveyPremium rate ranking indexOregon Insurance Division,  Washington does not have a corporate income tax but does have a gross receipts tax (Business & Occupancy Tax). While not strictly comparable to corporate income tax rates, it is imposed on revenues, not profits, resulting in noteworthy effective tax rates, particularly for small businesses and startups.2 The average DMV car registration in CA is not easy to find as it includes a vehicle license fee which is based on a percentage (0.65%) of the purchase price.