The Oregon Biz Report - Business News from Oregon

U.S. Chamber Comments on Bipartisan Tax Fairness and Simplification Act
By U.S. Chamber of Commerce

WASHINGTON, D.C.—The U.S. Chamber of Commerce today said it believes the bipartisan efforts of Senators Wyden and Gregg to begin the process to reform the tax code take steps in the right direction, addressing two major concerns in the tax code – the high marginal corporate tax rate and onerous and burdensome alternative minimum tax.

“While this is a great beginning, with tax reform the devil is always in the details,” said Dr. Martin Regalia, chief economist for the Chamber. “This proposal includes tax increases which are intended to pay for the proposal’s broad benefits but which fall disproportionately on specific sectors, industries, and income groups.”

Insurance giant AIG will pay $8 million to settle lawsuit over its role in causing Oregon pension fund losses
Oregon Public Employees Retirement Fund filed suit to recoup losses for workers and retirees
BY Oregon State Treasurer Ben Westlund,

SALEM – The Oregon Public Employee Retirement Fund will recover losses that were attributable to a pattern of poor disclosure and bid-rigging by insurance giant American International Group Inc. (AIG), under a settlement announced today by State Treasurer Ben Westlund and Attorney General John Kroger. The company agreed to pay $8 million to settle the lawsuit, which alleged securities fraud. The suit was filed by the State Treasurer’s Office and Public Employee Retirement System Board.

“We go to great lengths to protect Oregonians and their public investments,” said Treasurer Westlund. “This settlement is another example of how your State Treasury is protecting the public good.”

Board membership – an honor or a financial minefield?
By Dunn, Carney, Allen, Higgins & Tongue

It is often thought of as an honor to be asked to serve on boards of directors.  However, those asked may be in for a surprise when it comes to the personal liability to which they may be exposing themselves.  An astute board prospect would certainly ask to see the articles and bylaws to see the degree to which these documents provide for indemnification and the advancement of expenses that might be incurred as a director.

Do these provisions protect the proposed director?  Maybe, if the circumstances are right.  Otherwise, no.

A recent Delaware court found that a former board member was not entitled to advancement or reimbursement of defense expenses after the board amended the bylaws to eliminate this protection for former directors, even though this amendment was made after the alleged bad acts or omissions occurred and after the former director ceased to be a director.

by Dennis Westlind
Stoel Rives LLP, Attorneys at Law

Today the Equal Employment Opportunity Commission (EEOC) releases new regulations that will define employers’ “reasonable factors other than age” or “RFOA” defense under the Age Discrimination in Employment Act (ADEA).  The new regulations would reflect two Supreme Court cases interpreting the RFOA defense: Smith v. City of Jackson (2005) and Meacham v. Knolls Atomic Power Laboratories (2008).  Click here to read the EEOC’s Proposed ADEA Regulations.

The Supreme Court held in Smith that employment practices having a disparate adverse impact on workers age 40 and older may violate the ADEA.  The Court in Meacham then ruled that when a plaintiff proves such an adverse impact, employers have the burden of proving that the practice that caused the adverse impact was based on reasonable factors other than age.”  Since Smith and Meacham, however, there have not been any interpretive regulations under the ADEA to guide employers on the RFOA defense.

The Bipartisan Tax Fairness and Simplification Act of 2010
By Senators Wyden (D-OR) and Gregg (R-NH)

As Congress readies for the inevitable partisan debate over how best to address the expiring 2001 and 2003 tax cuts, U.S. Senators Ron Wyden (D-Ore.) and Judd Gregg (R-NH) today offered a bipartisan solution. The “Bipartisan Tax Fairness and Simplification Act of 2010″ takes a comprehensive approach to reforming the tangled web of nearly 10,000 exemptions, deductions, credits and other preferences that currently clutter the U.S. tax code in order to create a simpler and fairer system that American workers and businesses can more easily navigate. By eliminating many of the tax expenditures that benefit narrow special interests, Wyden-Gregg offers fiscally-responsible tax-relief to the middle class and growth opportunities for American businesses to create jobs and compete globally.

Business News Note: A few years the Governor of Arizona invited Phil Knight for a visit which immediately started rumors that the Governor was luring NIKE to his state.  Now the rumors are awaking again in light of new Measure 66-67 taxes passed on Oregon business that Phil Knight opposed. Below is an editorial from the Idaho Statesman Newspaper.

By Dan Popkey , Idaho Statesman (Boise, Idaho)
February 20, 2010

Nike founder Phil Knight is hopping mad at $727 million in tax increases on corporations and the wealthy in Oregon. Idaho leaders long to catch their rich neighbor’s eye.  Idaho has wooed Nike before – a revelation offered by Lt. Gov. Brad Little, who salivates at the prospect of landing one of the world’s best-known brands.   “Phil Knight was up front: Don’t change the tax code, and if you do, we’re going to do something,” Little said. Knight hasn’t expressed interest yet, Little said. “But we’re gonna call him.”  Knight is No. 24 on Forbes’ list of richest Americans, with a net worth of $9.5 billion. He gave $100,000 to the campaign to defeat Measures 66 and 67. Both tax bills passed Jan. 26.

Oregon NFIB,
The Oregon Legislature is now in its third week of the special session. Feb. 11 was the last day for bills to move out of their committee of origin, except for those in Revenue, Rules, or Ways and Means. This means a number of bills will be left in committee and are effectively dead.  The Legislature passed on any type of kicker reform. Gov. Ted Kulongoski asked legislators before the special session to pass a measure that would permanently place the kicker in a rainy day fund. But lawmakers decided now is not the right time for it.

The Senate Rules Committee passed a measure that would permanently put in place annual sessions. This would be a constitutional change and would require a vote of the people in the November election. Polling recently showed Oregonians in favor of annual sessions. The Senate should vote on the measure later this week.

New Energy Institute Analysis: Copenhagen Commitments Fall Short
US Chamber of Commerce

WASHINGTON, D.C.— A new analysis released today by the U.S. Chamber’s Institute for 21st Century Energy reveals that even if emissions reduction pledges made under the Copenhagen Accord were adopted, the world would still see a significant rise in greenhouse gas emissions, primarily because of growing emissions from developing countries.  In a new report titled “Copenhagen Accord By-the-Numbers,” the Energy Institute analyzed all 2020 emissions reduction targets submitted by developed and developing nations to the Copenhagen Accord.  Under the Institute’s analysis, even if the targets submitted are adopted, global emissions in 2020 will still be above 2005 levels by as much as 20 percent.

Oregon Department of Revenue,

SALEM—From anvils to zeppelins, the personal property you use in your business may be taxed.  If you’re a business owner, the time to file your personal property return is March 1, according to the Oregon Department of Revenue.  Oregon law requires that all business owners-even owners of home-based businesses-file a return with their county assessor that lists all business-related personal property.  Personal property includes anything you use for business purposes. It also includes leased equipment, such as copiers.

For Portland, more bikeways mean fewer paved roads
By Dr. Eric Fuits,
EconInternational

The Portland City Council unanimously approved the nation’s most ambitious bike-projects initiative Thursday, with Mayor Sam Adams promising to submit a $20 million “kickstart” funding plan within 30 days.

At the heart of the proposal is nearly 700 miles of new bikeways that would make up a “safer and more comfortable” two-wheeled urban network for new cyclists.

By Oregon Tax News,

This month President Obama released a budget plan that emphasizes new spending freezes and fiscal accountability but comes with an extraordinary price tag.   Overall, the budget reveals federal spending will grow to $3.72 trillion dollars in the 2010 fiscal year and will increase to $3.83 trillion in 2011.  The Obama Administration plans to add $25 billion in new state spending for Medicaid.  Also in the works is another jobs stimulus spending, but this time targeting low-income family programs such as health research, heating, and education.  An extension of entitlements to future generations can be seen in a small budget shift that puts the Pell Grant program, used to aid college students, into the mandatory spending column.  This transition will cost $307 billion over 10 years, which makes it an entitlement similar to social security.

Here is a sample of 19 tax changes and increased complaince costs in the president’s budget.

1.  Taxes on high-income earners will rise by nearly $1 trillion over the next 10 years.

2.  The top two income-tax rates, which affects people earning more than $200,000 a year, or $250,000 for married couples, will be  rise from 33% and 35% to 36% and 39.6%.

NW Business Litigation Blog
Ater Wynne
Oregon Attorneys at Law,

The “tax gap” is the difference between what the IRS collects and what it thinks it is owed.  In 2005, the IRS estimated the gap was $345 billion, including approximately $60 billion in employment taxes.  To help close the gap, the IRS announced it would conduct a National Research Project (NRP), randomly auditing over 6,000 employers over the next three years.  NRP audits are used to generate baseline data that the IRS uses internally in determining what are typical numbers on a return.  As a result, the audits are very comprehensive.  The IRS is now about to begin the audits.

The NRP audits will focus on four areas: employee classification, fringe benefits, expense reimbursements and compensation paid to owners.  The classification issue (whether a worker is an independent contractor or an employee) has long been fruitful ground for the IRS due to the lack of clear standards.

State Reprseentative Paul Holvey Press Release,

House Committee Passes Key Consumer Protection Bills SALEM — The House Consumer Protection & Government Accountability Committee, chaired by Rep. Paul Holvey (D-Eugene), passed the following bills of note out of committee.

HB 3624: Requires appraisal management companies (AMCs), which are often owned and operated by large banks, to register in Oregon. Rep. Paul Holvey expressed need for the bill, saying, “Appraisal Management Companies are currently unregulated and have started to control the entire appraisal industry without oversight or cohesive industry standards, which has jeopardized the reputation of the whole appraisal process. I have personally been contacted by more than 60 appraisers expressing urgent need for AMC regulation, stating that they are receiving sometimes less than half of the fee they had customarily received for appraisals, yet AMCs are charging the customer more than the industry previously charged. When lower fees become the main requirement for a work assignment, quality will diminish and those who want to do credible and ethical work will leave the profession. HB 3624 establishes standards and regulates AMCs so that there is ample oversight and brings integrity back to the appraisal industry.”

Markets Don’t Stay Bad Forever: Cycles, Trends, and an Oil Refining Example
By Bill Conerly,
Conerly Consulting, Businomics,

The report on retail sales shows that consumers are loosening their purse strings, continuing a trend that is now about a year old, though with plenty of backsliding along the way.

Some of the increase in January may reflect higher prices for food, but we also saw gains in pure discretionary categories, such as electronics and sporting goods.  This is not a return to the old days of bling and extravagance.  Consumers continue to increase their savings rate and pay down debt, but they can do both of those things while gently raising their spending.

By Associated Oregon Industries,

In testimony Monday morning before a joint session of the House and Senate Revenue Committees, state economist Tom Potiowsky proclaimed that the state’s recession was over, but predicted a jobless recovery through 2010.  Potiowsky even warned of the prospects of a “double dip” recession if the federal government discontinued stimulus spending.

Oregon 4th quarter 2009 employment levels dipped again for the seventh consecutive quarter.  The annualized rate of job decline was 3.7 percent.  Average monthly job losses in late 2009 was 2,300 lost jobs per month, which was an improvement over the 9,800 average lost jobs per month in the first half of 2009.  But employment prospects in Oregon are shaky at best.  In the week after Oregon voters approved tax increases on business and individuals, Oregon led the nation in new jobless claims, with 4,336 new Oregonians seeking unemployment benefits.

Nearly Forty Percent of Workers Have Dated a Co-Worker, Finds Annual CareerBuilder Valentine’s Day Survey. Nearly One-Third End Up Marrying Co-Workers They Dated

Career Builders Survey — Economy up, economy down, one thing remains the same: love is in the air at the office. Nearly four-in-ten (37 percent) workers said they have dated a co-worker at some time during their careers, in line with the forty percent who said the same in both 2009 and 2008. Additionally, 32 percent said they went on to marry the person they dated at work. This is according to CareerBuilder’s annual office romance survey of more than 5,200 workers.

Some workers are dating those above them on the office ladder. When it comes to dating higher ups, women were more likely than men to date someone above them in their company’s hierarchy. Thirty percent of women said they have dated someone who holds a higher position in their organization; 19 percent of men report they have done the same.

BY Oregon Small Business Association,

William Poundstone’s bottom line: consumers don’t really know what anything should cost. In his book “Priceless,” Poundstone zestfully and entertainingly explains the economics, psychology, and intellectual reasoning surrounding the ways in which producers and sellers take advantage of buyers’ lack of knowledge. Cost and price are two different notions; the first is a value, the second a number. Worldwide, price-consulting firms, experts in the psychology of pricing, advise companies on how to put the most profitable numbers on their products.  They do so in several ways:

Anchoring, as every luxury retailer knows, uses an anchor, a high-priced product that may never sell but “makes everything else look affordable by comparison.”

By Patrick Emerson
Oregon Economics Blog

A rather depressing sense of self-satisfaction seems to have consumed the state democrats after the passage of Measures 66 & 67. But celebrating their passage as a major political victory, and allowing their passage to become an excuse not to immediately address the revenue instability that necessitated the new taxes, is a serious mistake. The taxes were not a victory to celebrate but a disheartening sign of the disfunction of the state’s revenue system. The fact that we had to pass them should be seen as a defeat, not a victory, and as a condemnation of our stewardship of the state’s finances. To allow these new taxes to take our eyes off of real reform is to squander an opportunity to permanently fix what’s wrong with the states revenues. Everyone is (or should be) upset, and motivated to fix what is wrong.

By Moore Information Polling

Annual Sessions for Oregon Legislature
“Would you vote yes to approve or no to oppose annual sessions for the state legislature?”

Our recent poll shows Oregon voters support annual sessions for the state legislature by more than a two-to-one margin. Today, 52% of voters statewide tell us they would vote “yes” to support a ballot measure that would change Oregon’s legislative schedule to annual sessions. Just 23% would vote “no” and the remaining 25% are undecided.

by Dennis Westlind
Stoel Rives LLP, Attorneys at Law

Most of us assume that if an employee swears at a manager or, he or she can be disciplined or even fired. That assumption may be wrong, depending on the context in which the swearing occurs. A federal judge recently held that the Federal Aviation Administration violated federal labor law when it removed a local union president from its premises after he used profanity toward his supervisor in the course of union activity. Click here to read the opinion in FAA and National Air Traffic Controllers Association.

In FAA, an employee (who was also the union president) got into a verbal altercation with his supervisor over what the employee felt were insufficient staffing levels under their union contract. In the course of that altercation, the employee told his boss: “F*** you, I don’t give a f***!” (Imagine a certain four-letter word that rhymes with “duck.”) In response, the supervisor had the employee escorted off of the employer’s premises.