Measure 66/67 Fallout

Discussion in 'Legal & Political Archive' started by pencap, Mar 24, 2010.

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  1. pencap


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    People downplayed the effect of a retroactive small business tax hike. Bad move. I laid off 4 employees. Might lay off more if the Medicare cuts (21%) aren't stopped. That's right. All the sudden I'm getting paid 21% LESS to take care of your parents and grandparents.

    Next to go is I'll quit taking Medicaid. That will leave only one other Ophthalmologist in the Gorge to take Medicaid. Guess what. Doubt he's gonna do alone, so Medicaid will go to Portland or Hermiston from here.

    Be careful what you wish for with the tax hikes on the "Rich small business owners" and "Rich doctors". A lot of you libs think just because it's a little and it's not out of your pocket then no problem. Well, the numbers cited on the election flyer were the MINIMUM. Who the bubblegum pays the minimum on ANYTHING? NOBODY.

    I'm just a small town eye doc. If I had a big company I would move it out now and live somewhere else.

    From your favorite fish wrapper, today's edition. Read it and weep:

    Idaho, Chicago try to woo Oregon business away over taxes
    By Jeff Manning, The Oregonian
    March 23, 2010, 8:20PM
    At a glance

    Measure 66: Raises state income taxes on high-income residents from 9 percent to as much as 11 percent, matching the highest state income tax rate in the country. The high-income rate drops to 9.9 percent in 2012.

    Measure 67: Is aimed at business, raising the state's corporate minimum tax to $150, or as much as $100,000 for large companies with at least $100 million in annual revenue.

    Combined: The measures should add an estimated $733 million annually to the state's general fund.The young CEO runs a successful technology company southwest of Portland employing hundreds and boasting a bright future. But if the executive has his way, he'll be moving the company out of Oregon this year or next.

    The passage of tax Measures 66 and 67 has convinced him a better, more profitable future lies elsewhere.

    "I'm happy to pay taxes," said the executive, who asked that neither he nor his business be identified. "But the Oregon system is broken, and I know there are a lot of other businesspeople who feel like I do, that it doesn't make sense to stay."

    Oregonians voted in January to extract an additional $733 million a year in new taxes from business and high-earning individuals. The election results, and the bruising campaign that preceded them, have some influential voices in Oregon's business class simmering with discontent.

    In response, states including Idaho, Montana and Ohio are on the recruiting offensive, taking dead aim at Oregon businesses. They could well find a receptive audience. Conservatives and moderates alike bemoan the message sent by the tax hikes.

    "Oregon's economy is already on the wrong side of the tracks," said Roy Tucker, managing partner of the Perkins Coie law firm in Portland. "The last thing we need is one more reason for entrepreneurs to decide not to do business here."

    Measures 66 and 67 "established battle lines that did not need to be drawn," added Portland venture investor David Chen. "The damage is not monetary in terms of the increased taxes. The far greater damage is in how it disenfranchised business."

    View full size
    Michael Lloyd, The OregonianOregon Gov. Ted KulongoskiOregon Gov. Ted Kulongoski is scrambling to contain the fallout. He's convinced that even after the passage of Measures 66 and 67, Oregon imposes one of the smallest tax burdens on business in the nation.

    "I understand this is an emotionally charged issue," said Kulongoski, a Democrat. "I've met with people who are very upset with the insinuation that somehow they weren't paying their fair share.

    "Once the passion of the moment passes, I am absolutely confident that Oregon is competitive with any state."

    But if the tax load on business in Oregon remains relatively low, many of those business owners also face a new personal income tax rate that is among the highest in the country. It's the double-whammy nature of the tax hike that has some incensed.

    "The governor is both right and wrong," retorted John von Schlegell, the influential head of Endeavour Capital, a Portland-based private equity fund. "What he and his cronies miss is, like it or not, the fat cat entrepreneurs are the ones that run companies, give to philanthropy, do angel investing, and create most of the jobs."

    Those leaders, von Schlegell contends, were paying 25 percent of the state's tax revenue, a number that now could reach 30 percent.

    "Even if some objective measure of all business taxes and fees says that Oregon is relatively fair, it's not fair to the people who control the jobs and pay all the taxes," von Schlegell said. "And they are the ones moving, and moving their businesses."

    "Fiscal irresponsibility"

    The bitter tone of the debate must be music to the ears of Idaho Gov. C.L. "Butch" Otter, who issued a pugnacious open letter earlier this month inviting Oregon businesses to flee the state.

    Joe Jaszewski/The Idaho StatesmanIdaho Gov. C.L. " Butch" Otter Otter said Oregon political leaders made maintaining government programs a priority over the health of the economy.

    "The problem in Oregon is that folks were convinced that state government was what needed to be shored up rather than the jobs and revenue-producing private sector for which state government is supposed to work," Otter wrote in his March 8 letter. "As a result, they're chasing some of their cash cows to the border. And I welcome those businesses with open arms."

    Donald Dietrich, director of the Idaho Department of Commerce, said his agency has heard from more than 10 Oregon companies seeking details on how they would fare under Idaho's lower personal income tax rate and property tax rates.

    Read earlier stories about Measures 66 and 67"People in Oregon are just fed up," Dietrich said. "... I feel confident we're going to have some defections."

    Montana, Ohio, Chicago and, most recently, Utah, have joined the parade of recruiters trying to poach Oregon businesses.

    Tim Boyle, CEO of Columbia Sportswear, met with Chicago Mayor Richard Daley earlier this month while in Chicago to open a new retail store. The genial Boyle, who in recent years emerged as an acerbic critic of local government, said he liked what he heard from Daley.

    "It's nice to meet with a guy who says he wants jobs," Boyle said.

    Boyle politely declined Daley's offer to move Columbia to the Windy City. The company is not looking to move, at least not now. Columbia will feel a minimal impact from the new corporate sales tax imposed by Measure 67, as its sales are spread all over the globe, Boyle said.

    "We're not shopping" for a new location, Boyle said. "We have a lot of employees who grew up with the company in Portland," Boyle said. "A move would obviously be very disruptive. But it's also disruptive to see the kind of fiscal irresponsibility we see in the city."

    Portland Mayor Sam Adams didn't respond to requests for comment.

    Washington tax haven

    It may take months, years even, to see if the talk of business relocations is real. Moving a company can takes months or years of planning.

    But it's a much simpler process for an individual to move, particularly when an inviting tax haven sits on the northern bank of the Columbia River. For those in Oregon's upper income bracket, who are looking at a 20 percent increase in their state income tax, Washington's income-tax-free zone looks increasingly inviting.

    Harley Roberts and Pat Richardson, two veteran Portland accountants, said they have seen an uptick in clients asking them to run the numbers on how their tax obligation would change in Washington.

    Successful Portland executives have for years been moving to Clark County in search of a lower tax bill. The stigma of walking out on their home state is pretty much gone.

    "I think a lot of them feel like their state walked out on them," Roberts said.

    Not everyone agrees, even within the business community.

    Portland accountant Dick Solomon said the tax refugees need to remember that it was Oregon's publicly funded institutions that educated the employees and built the infrastructure that helped their companies prosper.

    "To ask the people who have really benefited from the tax cuts of the Bush administration to give a little bit back to the state when the state is hurting, I don't think that's so unreasonable," Solomon said. "Unfortunately, you're asking a small group of people to furnish the money."

    As the debate rages, some executives fear that Measures 66 and 67 could be just the beginning. The state faces an even larger budget deficit -- $2.5 billion by most accounts -- in the next biennium.

    On this issue, Kulongoski said the executives' concerns are well-founded. The recession has taken such a large bite out of the state's economy and, therefore, its tax receipts, there's no easy path to recovery.

    Kulongoski lamented the Legislature's refusal to consider reforming the state's kicker law, which makes it difficult for the state to establish a reserve.

    "I'm as concerned about that as the business community," Kulongoski said. "That's why I wanted the kicker reform. We needed to build a rainy day fund so that when we need more revenue, we have the reserve."

    The young CEO pondering a move out of Oregon agrees with Kulongoski that killing the kicker would be a good first step toward wholesale tax reform. "The kicker is madness," he said.

    But when the next budget gap reaches the crisis point, it also would be madness to single out business, he said. "You're going to flush everyone out of the state who pays taxes."

    -- Jeff Manning
    © 2010 All rights reserved.
  2. longcolt

    Zephyrhills, FL
    Active Member

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    Thats a good article and very clear.

    But you must understand that Oregon had to find some way to protect its Union Pension fund that is guaranteed an 8% annual return even when the market crashes. So you have to help make up for all the losses in the Pension fund and the lost earnings for all those years.

    You certainly cannot expect any of Oregon's Public Union workers to experience any reductions in pay and benefits like the rest of us in the private sector have experienced. Layoffs no way, government is hiring in several areas this year.

    When revenue drops due to an economic decline a private company will cuts costs to stay in business. They layoff workers, cut salaries, cut benefits, cut overhead, etc.

    In Oregon when tax revenues drop they RAISE TAXES and continue to give pay raises. Its clear who owns this state and if one does not agree one has to move, I guess.

    What the government does not realize is that public workers cannot support the tax revenue requirements on their own. Once private employers start to leave and individuals that realize they can live a better lifestyle in other states, there will be a serious tax revenue decline.

    At that stage a crisis will begin and new politicians will come in to offer tax breaks to business and incentives to individuals to form businesses and to create jobs. The cycle will continue as it has in past years.
  3. Rapid1


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    couldn't have said it better myself...

    I just have to hope that the next wave of politicians work for us instead of themselves and their union buddies.

    but I'm not holding my breath...Idaho and Montana are looking better every day.
  4. longcolt

    Zephyrhills, FL
    Active Member

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    It is interesting that the article put up in the Oregonian today, "States Open their Arms To Oregon Businesses" discusses measures 66-67 tax increases and repercussions but does not bring up any discussion about the Government sector cutting its costs to balance its budget.

    Understand there is still a 2.5 billion budget shortfall even with the measures in place. Our Kulongoski wants to take the Kicker to cure part of that problem, and that is in effect another tax hike on Oregon citizens if he manages to pull that off.

    But Kulongoski has the same problem as does the Gov of California today. They can't cut expenses! Unions have locked in contracts, and the states allowed this, so wages, benefits, pensions, raises cannot be touched. Since that is the lions share of the states expenses they have no way to manage their budgets.

    I am not anti-union, having been a member of the AFL-CIO going through college, but I am against Union organization of public sector employees since it results in the extortion of tax monies on non-union citizens that support the government. It was illegial in the 1960's and did not happen until much later, of course during good times and under Democratic administrations in exchange for Union support. Not a slam to unions, its just the facts of how it all took place and the resulting frustration of budget juggling.

    Until the Contracts are modified to allow wage and benefit cuts in emergency economic crunch times this problem will persist.
  5. Joe Link

    Joe Link
    Portland, OR
    Well-Known Member Staff Member Lifetime Supporter Bronze Supporter 2015 Volunteer 2016 Volunteer

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    9. The "Legal & Political" section is to pertain to firearms only. There shall be no legal & political discussion and/or material outside of the "Legal & Political" section.

    There are many different people here with many different viewpoints on various issues. Like religion, discussing these issues here is highly likely to offend and very little good can come of it. We need to be focusing on the things that bring us together (firearms), not the things that have the potential to divide us (politics).
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