If you don't think taxes and business costs matter, look at what Chicago's mayor is doing. According to Portland's Business Journal, less than a week after Oregon voters passed a tax increase on businesses, Chicago Mayor Richard M. Daley says he wants to start poaching Oregon companies. Daley feels pretty good about his chances since Chicago already has lured Boeing's corporate headquarters from Seattle.
Daley may have to stand in line. Vancouver, just a stone's throw across the Columbia River, is telling Portland businesses to "C'mon over." But the Columbian editorial carries a warning for Washington's governor and lawmakers who are toying with raising taxes to fill the $2.6 billion crater in the state's budget. The Columbian editorial said:
"Whatever government revenue might be generated by the passage of Measures 66 and 67 in Oregon on Tuesday, make no mistake that one result is simple and straightforward. It has allowed those who make decisions with taxpayer dollars to skate. Rather then solving the problem of paying too much out to everything — including salaries and benefits to Oregon state workers — legislators simply asked for, and received, more.
We hope Washington state is not next, but we suspect that all states — including ours — are in the reaching-deeper-into-our-pockets mood instead of getting their expenses under control."
The Columbian editorial went on to say:
"Measure 67 does more than just increase the corporate minimum tax from $10 annually to a sliding scale starting at $150 for companies with less than $500,000 in sales, up to $100,000 for companies with $100 million or more in sales. It also enforces the ghastly provision of making the tax retroactive, extending back to Jan. 31, 2009. (CEO: “Oops! I guess last year wasn’t as profitable as I thought!) To which Clark County economic development officials respond: “C’mon over!”
As for Measure 66, it increases state income taxes for individuals making more than $125,000 per year or families making more than $250,000. If that sounds like a minor hit on the rich, be advised that most businesses are led by people making more than $125,000. Furthermore, many of those leaders live in Clark County, and they’re sick of having to pay state income tax in Oregon. Combine those dual insults, and it makes even more sense to move a business across the river."
The Seattle Times warned in an editorial on January 28:
"Gov. Chris Gregoire and top Democrats in the Legislature are all but popping Champagne corks in celebration of two successful Oregon ballot measures to raise taxes. Whoopee. Party!!!
At risk of interrupting the merriment, slow down. Washington is not Oregon. And the two tax referendums were constructed in a way that does not represent Northwest-wide enthusiasm for the brilliance — or lack of it — of raising taxes in a recession.
Increasing taxes on businesses in a state with nearly 11 percent unemployment does not make a lot of sense. Higher taxes will not produce more jobs and may limit the ability to add people to payrolls."
Our state's economy is fragile and our unemployment rate is too high -- hovering short of 10 percent statewide and nearly 12 percent in Southwest Washington. Employers in Washington already have seen their unemployment taxes skyrocket by as much as 1,300 percent in some cases at the beginning of 2010. The state Dept. of Labor and Industries (L&I) hit business with an average 7.6 percent increase in workers' compensation premiums earlier this month and the governor and controlling Democrats tell employers reforming workers comp is "off the table" this session.
Those responses may be the politically correct answer today for the unions, but when those legislators turn to politicians next summer, they'll have some explainin' to do when door-belling. Because of inaction this session, employers are likely to be faced with double-digit workers' comp in 2011 -- and perhaps triple-digit unemployment tax hikes.Then try to explain tax increases to families whose job-providers' B&O taxes cut jobs or work hours.
If that isn't enough, explain to families why they have more money taken from them by government when the Legislature and governor raised their sales tax.
Don C. Brunell, President (DonB@awb.org)
