Oregon has attracted nearly $15 billion in investment from new firms that have made the state their home or part of their business operations and one of the reasons is it simply pays to do business here.
The Oregon Legislature has taken a lead role in reducing property tax rates, worker compensation rates, income tax rates, and regulatory red tape. As a result, overall business costs have fallen for the past 8 years while those in neighboring states have been on the rise.
The table below provides a comprehensive but concise analysis of major business costs from state to state for the Western U.S. region. If you would like a business cost comparison for a state not listed, please contact us at info@edcoinfo.com.
Western States Business Costs Comparison
(Prepared by Economic Development for Central Oregon)
|
Western States Business Costs Comparison |
|
Cost Factor |
Oregon |
California |
Washington |
Idaho |
Colorado |
| OPERATIONAL COSTS |
| Natural Gas Costs (at city gate) (Avg. $/Mcf, 2004) |
$5.86 |
$6.04 |
$6.15 |
$5.69 |
$5.02 |
| Electricity Costs, Avg. Industrial Retail Price (cents/kwh, March 2005) |
$4.19 |
$8.01 |
$3.85 |
$3.51 |
$5.36 |
| TAXES |
| Tax Burden (% of income, 2005 combined state & local) |
9.6% |
10.3% |
10.0% |
10.0% |
9.5% |
| Corporate Excise (Income) Tax |
6.60% |
8.84% |
0.00% |
7.60% |
4.63% |
| Gross Receipts Tax |
0.00% |
0.00% |
4.80% |
0.00% |
0.00% |
| Business & Occupation Tax |
0.00% |
0.00% |
0.471%-1.5% |
0.00% |
0.00% |
| Capital Gains Tax Rate |
9.00% |
9.30% |
0.00% |
7.80% |
4.63% |
| Communications Tax Rate |
0.00% |
7.25% |
6.50% |
6.00% |
2.90% |
| On Interstate Calls |
NO |
NO |
YES |
NO |
NO |
| On Intrastate Calls |
NO |
NO |
YES |
NO |
YES |
| Sales Tax |
0.00% |
6.25% |
6.50% |
6.00% |
2.90% |
| Unemployment Insurance Tax (new employers) |
3.20% |
3.40% |
5.40% |
1.50% |
1.70% |
| Unemployment Insurance Taxable Wage Base |
$27,000 |
$7,000 |
$30,200 |
$27,600 |
$10,000 |
| Average Property Tax Rates for Market Value of Property, 2002 |
1.14% |
1.08% |
1.23% |
1.48% |
7.22% |
| Enterprise Zone Benefits |
100% property tax exemption, 25% rebates on system development charges for 3-5years (Redmond and Prineville only) |
Up to $24,000 per job tax credit, depending on investment, job wages, and economic distress. |
No Enterprise Zone |
No Enterprise Zone |
1%-3% State Sales Tax exemption, $200 tax credit per employee for health insurance (2 yrs.), 10% tax credit for job training, 3% invest. tax credit, 3% R&D tax credit, 25% build rehab. tax credits. |
| OTHER COST FACTORS |
| Personal Income Tax |
5% -9% |
1%-9.3% |
0.00% |
1.6%-7.8% |
4.63% |
| Real Estate Excise Tax |
0.00% |
0.00% |
1.28% |
0.00% |
0.00% |
| Business & Occupation Tax |
0.00% |
0.00% |
0.001% to 0.0006% of gross revenue or flat fees based on class of business |
0.00% |
0.00% |
| Motor Fuels Tax Per Gallon |
$0.24 |
$0.18 |
$0.28 |
$0.25 |
$0.22 |
| LABOR |
| Average Annual Pay, 2004 (state) |
$36,370 |
$41,510 |
$40,430 |
$32,350 |
$39,410 |
| Average Hourly Earnings for Production Occupations (2004) |
$14.21 |
$13.46 |
$15.74 |
$12.67 |
$14.60 |
| % of Private Manufacturing Union Membership (2004) |
15.20% |
19.30% |
18.50% |
5.80% |
8.40% |
| Average Workers Compensation Rate per $100 of Payroll, 2004 |
$2.05 |
$6.08 |
$2.20 |
$2.25 |
$2.33 | |
Updated with most recent data as of May 2005.
Utilities
A significant cost advantage for Central Oregon over other places in the nation (which is not listed below) are our low-cost utilities – on average 30% lower than the U.S. average. For more information, check out the utilities section within the Doing Business section of our web page.
Property Taxes
Property values are assessed differently in each state. For example, California’s property tax rate is set at 1% ($10 per $1,000 valuation) of real market values. Other states, with the exception of Nevada (not listed in this comparison) and Oregon, use the market value model. Oregon’s rates are based on assessed values which run consistently below market values, especially in the case of existing properties, which have an annual 3% maximum increase cap. Consequently, actual property tax bills are closer parity across the states under comparison. Where there are differences, they are due more to market values of property versus the rate imposed.
Enterprise Zone Benefits
Oregon is unique in offering a cash benefit via uncollected property taxes, that other states with enterprise zones don’t offer. Most other states offer tax credits which, in order to be utilized, must be applied to income (i.e. profits). Additionally, they are dependent on employment levels. Oregon’s program is not employment dependent and can be used again and again for subsequent expansions and investments. On average, total benefits of the Enterprise Zone in Redmond on $1million of qualified investment (buildings and equipment) ranges between $57,292 and $95,488. Participation in the Enterprise Zone Program in Oregon is also hassle-free, and non-bureaucratic, while other states, as a rule, have complex regulations depending on the type of business, geographic area, etc. For more information, please visit the Incentives section of our website. |
