Oregonian, Willamette Week oppose business tax 26-201

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By Oregon Small Business Association,

One of the biggest business measures on the ballot is a business tax measure in Portland and it is almost overlooked and overshadowed by the other ballot measures and Governor’s race. Both the State’s largest newspaper Editorial Board and the City’s big weekly newspaper the Willamette Week came out against Portland’s gross receipts tax measure 26-201.

Here is what The Oregonian said,

First, there’s the question of how well it’s structured. The measure calls for imposing a 1 percent tax on the Portland sales of companies that ring up more than $500,000 in revenue in Portland and more than $1 billion nationally. Groceries, medicine, health care services would be exempt but other “retail” operations such as banks would not be.

But, like other ballot measures that attempt to tackle tax policy, the measure is so vague that no one really knows how many and which companies will be affected. In evaluating an earlier version of the proposal, the city revenue bureau said the tax could affect anywhere from about 115 companies to more than 700. A report by ECONorthwest, which was commissioned by opponents, estimates the tax could raise between $43 million and $79 million a year. And the definition of “retail” is so unspecific, that companies aren’t even sure whether they would be included or not. (As a matter of disclosure: It is not presently known whether the Oregonian Media Group, which runs The Oregonian/OregonLive and is owned by Advance Local Media, would be subject to the tax.)

Second, this tax will hit Portlanders, and low-income residents will likely feel it the most. Proponents dismiss the idea that national companies would bother to change pricing in stores or otherwise seek to pass the tax on to consumers. Economists and the city’s revenue bureau, however, tell us differently, warning that some, if not all, of the burden will likely be passed down to consumers.

Even if Portlanders don’t trust economists or the city, they should look to their own common sense. Consider banks, which are explicitly included as companies that will have to pay this tax. Banks excel at creating, imposing and collecting a wide range of fees on individual customers. Why would voters believe that banks would refrain from passing on that tax burden to its Portland customers?

Here is what the Willamette Week said,

“First, although proponents deny it, the tax would fall hardest on the very people it’s supposed to help: the poor. The initiative imposes a tax on gross receipts—that means sales. In an analysis of the measure last year, the city’s Revenue Division asserted “some businesses will partially or wholly pass the [tax] on to consumers in the form of a price increase.”

Second, the measure does not require that investment of the tax dollars in energy efficiency actually go to the homes of low-income Portlanders. Measure guidelines say that “at least half of the grants in this category should specifically benefit low-income people and people of color.” Why not all of it? Why allow half to go to people who are neither low-income or people of color? And in legal terms, the word “should” is not the same as “must.” In fact, it’s such a weak guideline that all the money could be spent entirely for the benefit of middle-class whites.

Nobody agrees on how much money the tax might raise. Estimates range from $35 million to $79 million a year. That’s a big variance. And unlike many special-purpose taxes approved by voters—such as the Portland Children’s Levy or funding for the Oregon Historical Society, both of which must be reapproved regularly by voters—there is no sunset clause for the Clean Energy Fund. Even the Multnomah County Library employed temporary funding for 36 years before becoming a permanent taxing district in 2012.

So we have a tax that would come out of the pockets of people it claims to help, with no guarantees the money would go to them, or any way to shut the spigot off if the experiment fails.”