Wednesday, April 7, 2010

The Latest News from Tax Hell

Posted By on Wed, Apr 7, 2010 at 6:37 PM

We’re still waiting for the mass exodus of businesses that conservatives predicted in the wake of voter approval of Measures 66 and 67 to happen. Meanwhile, a couple of developments this week suggest that Oregon isn’t really such a horrible place to locate a business after all.

Yesterday, the pharmaceutical company Genentech cut the ribbon to open its new manufacturing plant in Hillsboro. The facility will employ 250 people to start, with the prospect of adding more as production ramps up.

“Genentech executives say they chose Oregon for several reasons: taxes are higher in California; Genentech received Strategic Reserve Funds from the state; and there's a well-educated local population,” Oregon Public Broadcasting reported.

The mention of a well-educated workforce shows once again that tax rates aren’t the only factor in deciding where to locate a business – especially a business that employs people with more than a minimum skill level and pays more than minimum wage, which is the kind of business Oregon needs to attract more of.

Meanwhile, a study commissioned by the Council on State Taxation (COST), an association of corporations that lobbies for lower state business taxes, reported that Oregon tied for the lowest level of state and local business taxes in fiscal year 2009.

The study, conducted by the accounting firm of Ernst & Young, compared the amount of state and local business taxes collected in each state with the total size of the state’s economy. On that basis, Oregon tied with Delaware and North Carolina for having the lowest tax level.

The study also calculated how much state spending benefited business and compared that with total business taxes paid. According to that computation, Oregon tied with Virginia and Maryland for giving businesses the biggest bang for their tax buck.

The study doesn’t take last fall’s tax measures into account, but it does seem to show that Oregon’s business climate isn’t as hellish as opponents of the measures claimed – and continue to claim.

“The data confirm that Oregon voters and the legislature were right in asking businesses to chip in a bit more to address Oregon’s revenue shortfall,” Steve Robinson, an analyst for the Oregon Center for Public Policy, said in a news release. “Throughout the recent campaign on Measures 66 and 67, OCPP said business taxes were low in Oregon. This corporate-funded study reaffirms that we were correct.”

Meanwhile, Ben Jacklet, managing editor of Oregon Business magazine, wrote on March 31 that "I still am lacking the name of a single job-creating investor or executive who is in fact leaving Oregon because of Measures 66 and 67." Jacklet cites Genentech, Facebook (which is building a big server farm in Prineville) and Ferrotec (a Japanese company that's planning to open manufacturing plant in Gresham) as examples of businesses that are moving here. (ToH to Steve Novick on BlueOregon.) 

A few months ago I offered $25 to anybody who could produce a bona fide example of a business that moved out of Oregon because of Measures 66 and 67. I’ve had no takers, so I’m renewing the offer today. I’m pretty confident I’m not going to go broke paying off all the winners.  

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