09/21/1992 Meeting - Laserfiche WebLink

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e Personal Income Tax Mr. Rutan and Mr. Nicholson reviewed the matrix details regarding the tax. Mr. Chastain cautioned that the administration costs provided by the State could be higher than actual costs due to uncertainty on the part of the State regarding the scope of the tax. Business Income Tax Mr. Rutan discussed the differences between a business net income tax and corporate income tax and offered examples of how the business income tax would work. Responding to a question from Ms. Ehrman, Mr. Rutan said that the information in the matrix was based on the Multnomah County model. Responding to a comment from Mr. Chastain about the stability of the tax, Mr. MacDonald asked if the stability level could be attributed to the manner in which the tax structure was designed. Mr. Chastain attributed the fluctuation in the tax to both income levels and the treatment of business losses under the structure. Ms. Bascom asked if the tax would serve as a disincentive for businesses to locate to Eugene. Mr. Nicholson pointed out that businesses inside the city would have to earn income inside the city in order to be liable for the tax. e Businesses outside the city would be liable for the tax if they earned income inside Eugene. Mr. Rutan said that the tax might effect some business decisions just because it was a tax and the reaction of the business community could be negative. Additionally, there are large corporations who operate through branch offices; a tax on a branch in Eugene could affect that company's decision to run business through the branch. Mr. Nicholson agreed that sales office location decisions could be affected, with the result that such facilities could be located in Springfield. Mr. Boles asked to what degree the tax had reduced business growth in Multnomah County. Mr. Rutan said it had not, but maintained that Multnomah County had achieved a critical mass of activity that was stronger and more diversified than that of Eugene. Responding to a question from Ms. Ehrman, Mr. Mounts said that the costs of collection were based on the State's administration charges to Multnomah County. The estimate of $150,000 also included a component for City costs. Responding to a question from Mr. Miller, Mr. Nicholson said that the owners of C corporations are paid a salary, and that salary is exempted from the business net income tax. Similar consideration is given to businesses that are not C corporations. Mr. Rutan referred the council to the examples on page 43 of the packet. e MINUTES--City Council Work Session September 21, 1992 Page 3 5:30 p.m.