Oregon voters passed measures 66 and 67 six months ago, and businesses are handling the tax increases well despite previous concerns of increases during a recession.
The perception surrounding these new tax increases, which will fund education, public safety and health care, is actually worse than the reality, experts said.
Measure 66 raises taxes on households that make $250,000 or more and individuals who make more than $125,000 from 9 percent to about 11 percent. Meanwhile, Measure 67 raises the corporate minimum tax from $10 to $150 and increases the corporate income tax rate on taxable income over $250,000 from 6 to about 8 percent. In 2013, the higher rate will apply only to corporate taxable income over $10 million. For 60 percent of Oregon’s C-corporations, taxes increased by less than $1,000 on average in 2009, according to a Business Oregon analysis. Partnerships, limited liability companies (LLCs), limited liability partnerships (LLPs) and S-corps, which are the corporate forms of most small businesses, pay a $150 corporate minimum, regardless of income or profit, according to the Vote Yes for Oregon Web site, a group in favor of Measures 66 and 67.
Small businesses are thriving, even with the nation’s current economic environment, said Jim Lindly, director of Lane Community College’s small business development center.
“This economy right now is spawning more businesses,” he said.
He said many people with special skills, like plumbing or carpentry, are not getting hired and are instead creating their own businesses.
“I think Oregon is a pretty good place to do business, especially for small businesses,”
Lindly said.
Some argue the new tax measures aren’t helping Oregon’s image in the nation.
“It doesn’t make Oregon more attractive. It’s not a good thing from an incentive standpoint,” said Marc Zolton, spokesperson for Oregon Business and Development Department.
Idaho’s governor is taking advantage of people’s negative perceptions. The new Web site Just Make the Shift (justmaketheshift.com) encourages Oregon businesses to move to Idaho. Just Make the Shift said Idaho has a better business climate than neighboring states, such as Oregon and Washington, and uses tax increases like Measures 66 and 67 as examples. According to the Web site, in a section called “Idaho By the Numbers,” Idaho seems comparatively more favorable than Oregon and Washington. Idaho has a 7.8 percent individual income tax, while Oregon has 11 percent. Idaho’s property tax is 2 percent, while Oregon’s is 3 percent.
“Business owners understand that having a state government working with you, rather than against you, makes all the difference,” Idaho Gov. C.L. “Butch” Otter wrote in a post on the Web site.
A recent survey in the May/June issue of Chief Executive magazine ranked Oregon at No. 38 on a ranking of the best states to do business. Oregon was ranked 24th in 2009. Some experts wonder if measures 66 and 67 are the reasons for Oregon’s 14-place decrease in the rankings. Local Eugene businesses like Ninkasi Brewing Company and Smith Family Bookstore, Inc. found the new tax measures to not be negatively effecting their businesses.
“It’s a fair tax,” Smith Family Bookstore, Inc. owner Evon Smith said. “The funds are being used in the right places. It didn’t appear to us as a downside.”
Nikos Ridge, one of the founders and co-owners of Ninkasi Brewing Company, said the new tax measures caused the company to revise its capital plan for 2010, but that they were handling the changes well.
“We’ve been able to grow despite the economy,” Ridge said.
He said he was more worried about the possibility of Oregon passing a “sin tax” law, which would tax things such as alcohol and cigarettes. “There’s uncertainty about the potential of that tax. We can’t be confident making decisions if that is still looming on the horizon,”
he said.
All in all, Oregon-based companies are handling measures 66 and 67 well. “We believe the business climate in Oregon is always an important issue. As a company we will always keep a careful watch on any legislation out of Salem affecting our business operations, our employees, and our headquarters,” Nike spokesperson Erin Dobson said in a statement.
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