A state tax built to fund Oregon classrooms is now being challenged as a driver of higher prices, tighter margins, and growing frustration among employers. House District 18 candidate Ben Fisher is moving to repeal the Corporate Activity Tax, setting up a direct collision between education funding and economic pressure already being felt across the state.
The Corporate Activity Tax, passed in 2019 under the Student Success Act, applies a 0.57 percent levy on business revenue above one million dollars, along with a $250 annual fee. It does not wait for profit. It taxes the top line, and that distinction is where the fight begins.
“The CAT is a tax on revenue, not profit,” Fisher said. “That means businesses pay it even when they’re losing money. It gets passed down to consumers through higher prices on groceries, gas, and housing.”
The proposal calls for a full repeal of the tax, formally eliminating it from Oregon law by January 1, 2027. In its place, Fisher is calling on lawmakers to rely on existing General Fund growth and internal budget decisions to maintain education funding without introducing a replacement tax.
At issue is how the tax behaves once it enters the real economy. Because it applies at multiple points along the supply chain, the same product can be taxed repeatedly before it ever reaches a customer. A crop grown in Southern Oregon, processed elsewhere in the state, and then sold in a retail market may carry the tax at each step. Those costs do not disappear. They accumulate.
For industries that rely on volume rather than large profit margins, that structure matters. Agriculture, trucking, and manufacturing operations often operate on narrow spreads between revenue and cost. A business generating over one million dollars in sales may still be operating close to break even. Under the current system, that business still pays.
The pressure does not stop at the business level. Costs move outward. In a state where housing remains tight, energy bills continue to climb, and basic goods have not returned to pre inflation pricing, even small increases tied to production and distribution can be felt quickly at the checkout counter.
There is also a growing concern about the time and effort required to comply with the tax. Tracking deductions, exemptions, and filing thresholds adds a layer of administrative work that falls heavier on smaller operators without dedicated financial teams. For many, that translates into lost hours that could otherwise be spent on expansion or hiring.
Still, the tax is not without purpose. It funds education. The Student Success Act depends on CAT revenue to support early learning programs and K through 12 improvements statewide. Removing that funding stream without a clearly defined replacement places immediate pressure on lawmakers to identify where that money will come from and what priorities may shift.
Fisher’s position is that the structure itself is flawed, not the goal. “Education funding is critical, but taxing revenue instead of profit is the wrong way to do it,” he said. “We can fund schools without making Oregon the worst state in the West to start or grow a business.”
The broader economic comparison is already part of the conversation. Most states do not impose a statewide gross receipts tax, and neighboring states continue to compete for investment, jobs, and relocation from businesses looking for lower operating costs.
The proposal is expected to be introduced in the upcoming legislative session, where it will face scrutiny from both sides of the aisle. Business groups, educators, and fiscal analysts are all likely to weigh in as the state confronts a familiar but unresolved question: how to fund public priorities without adding pressure to an already strained cost of living.
What happens next will not just determine the future of a single tax. It will define how Oregon chooses to balance growth, affordability, and the long term stability of its public systems.