New business alliance stops business tax in Senate

By BIZ Report,

The new Alliance of Oregon Business Associations scored a defeat of a business tax plan in the Senate on Wednesday.  The group was formed just before Session began under the leadership of Associated Oregon Industries.  At issue was HB 3405-9 which raised the $10 corporate minimum tax from $150 to $100,000.  The bill also included increases in business registry filings and uniform commercial code filings to raise over $250 million. Democrat State Senator Mark Hass withheld his support for the bill unless the increases were limited in time and not made permanent.   Senator Hass represents a part of Washington County which include some of the largest businesses in Oregon.   His vote prevented the super majority needed to pass the tax.

Over 30 business groups are included in the Alliance.  The collection of business interest represent the full spectrum of involvement from agriculture (Oregonians for Food and Shelter, Associated Oregon Loggers), banks (Oregon Bankers Association, Independent Community Banks of Oregon), construction (Oregon Home Builders Association), restaurants (Oregon Restaurant Association) and transportation related organizations (Oregon Trucking Association, Oregon Automobile Dealers Association).

Below is their statement issued earlier…

Oregon Business Opposes Tax Increases

We, the members of the Alliance, represent over 25,000 Oregon businesses. We employ over 500,000 Oregonians.   Oregon companies are struggling to maintain their businesses, keep people employed and make payrolls through the worst economy since the Great Depression.

Alliance members believe that new and increased taxes on companies and taxpayers will hurt Oregon’s prospects for recovery. We do not believe that increased taxes are needed to balance the state’s budget.

Oregon’s primary problem: Unemployment

Over 265,000 Oregonians are unemployed. One in every eight Oregonians can’t find a job. Our unemployment rate is the second highest in the nation

According to the state’s official economic forecast for 2009:

• The transportation equipment sector will lose 28% of its jobs.
• The wood products industry will shed 19% of its jobs.
• The computer and electronic sector will lose 13.7% of its jobs.
• Employment in the metals and machinery sector will decline 14.6%.
• Construction employment will be down 18.3%.
• The non-durable sector will see a 10.4% job loss.
• Trade, transportation and utilities will have 6.5% fewer jobs.
• The financial sector will lose 4.6% of its workforce.
• Professional and business services employment will decline 7.0%.
• Leisure and hospitality will show a decline of 4.2%.

According to the Oregon Department of Employment’s most recent unemployment report, only government and the education/health sectors gained jobs in April.  Specifically, government added 2,100 jobs while the state’s businesses lost 9,500 jobs. This is not sustainable for Oregon’s economy.

Oregon’s top priority: Job retention and creation

The Oregon legislature needs to focus on a strategy to re-power Oregon through private sector job retention and creation. We believe strongly that increased taxes are detrimental to job growth. An increased tax burden will hurt the ability of our members to create desperately needed jobs. It is the wrong approach to balance the state’s budget.

We support budget proposals that pave the way for the state to live within its means without raising taxes. Each of our respective business members – as well as every Oregon family – has made difficult choices to live within their means as the recession takes its toll.   State government will have to make some of these same tough choices, like holding the line on growth, pay increases and COLAs. Holding the line on taxes and spending in this recession clearly is the best prescription for job growth. We believe job growth benefits us all, including the public sector.

Proposed tax increases will kill nearly 6,000 Oregon jobs

Balancing the budget without new taxes is a difficult but not insurmountable task. Our neighbor to the north, Washington State, balanced its budget without tax hikes. To the south, California voters held legislators accountable with the overwhelming defeat of a series of tax increases at the ballot box. Voter sentiment is clear. There is no appetite for tax hikes, particularly in the midst of a recession when jobs are at a premium.

Oregon appears to be set to increase spending with $1 billion more in proposed spending from 2007-09 levels. This spending is funded with $800 million in new taxes on Oregon businesses and individuals, not including new transportation and health care taxes.   Proposed budget “cuts” are not cuts in state spending, they’re “cuts” to projected government spending increases. This type of budgeting sets the stage for unsustainable government growth and more job-stifling tax hikes.

The Alliance has reviewed the various legislative tax proposals under consideration for balancing the state budget, including a new permanent corporate minimum tax based on gross receipts, a new corporate income tax, and a new personal income tax.

We strongly oppose each of these tax hikes. These proposals ignore the stark realities of our current recession. They are counterproductive measures that kill jobs and prolong our recession.  In fact, the Legislative Revenue Office estimates that these tax hikes will kill 5,865 critical Oregon jobs.

The Alliance is steadfastly opposed to a gross receipts-style minimum tax on companies with no profit.  A corporate tax rate hike will further depress Oregon’s economy by siphoning resources that are used for business investment in job-generating capital.  A personal tax hike would give Oregon the dubious distinction of having the highest marginal income tax rate in the nation, further discouraging capital creation and investment in Oregon.

The Alliance urges legislators to reject additional taxes on businesses and individuals. The quickest path out of this recession is to let our state’s job creators do what they do best without saddling them with job-killing tax hikes.

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