Editorial: Does Oregon tax things that can’t be touched correctly?

Published 9:25 am Friday, July 25, 2025

The state of Oregon taxes some things that cannot be touched.

The state taxes property, such as a home and physical business assets. For some businesses, the state also taxes things that are intangible.

Owning an intangible thing can be like owning a right to something. Think about owning a license to a popular software. It could be very valuable.

Delta Airline and PacifiCorp are both businesses subject to tax in Oregon on their intangibles, as well as their tangibles. They are what are called centrally assessed businesses. The business types that are centrally assessed are identified by category in Oregon law. Delta is centrally assessed because under Oregon law it is air transportation. PacifiCorp is centrally assessed because it sells electricity. Oregon is arguably not out of the ordinary in that way.

The two taxpayers went to court in related cases. We must always confess we are oversimplifying in such matters. But basically the two taxpayers argued that such tax treatment is in violation of the Oregon Constitution and the U.S. Constitution.

There were multiple arguments involved. One is that the government’s ability to treat citizens differently is limited. Subjecting some entities to central assessment and taxation of intangibles does treat them differently. For instance, what is the genuine difference among the assets of an air transportation businesses, which are centrally assessed, and the local bus and trucking companies, which are not?

The Oregon Supreme Court recently ruled against the two companies. So, Oregon’s Department of Revenue can continue its practice of taxing intangibles for them.

We lack the competence to comment on the constitutional arguments. For us, the question is: Is there a legitimate purpose in seeking to tax intangibles for certain businesses? That’s easy. Yes. Imagine the economic distortion if a thing like ownership of a software license could not be taxed. Is taxing intangibles fairly applied in Oregon? That’s less clear.

You can read the decision here: tinyurl.com/taxingintangibles.