A tax by any other name

Some days it just feels like déjà vu all over again.

Less than sixty days into the session, the Democrats have proposed yet another tax increase on business — the elimination of the corporate kicker. Predictably, just like they have done for the last six years, the Portland Business Alliance and the Oregon Business Association have jumped immediately forward to support it. Has there been a tax increase on business in the last six years, state or local, which these two groups haven’t supported? Both organizations speak for Portland’s major business elites. Neither of them speaks for Oregon’s main street business interests.
The Portland Business Alliance is dominated by the state’s banking, utility and insurance interests. Their ranks have been, and are, populated by former senior staff members of the Goldschmidt, Roberts, Kitzhaber and Kulongoski gubernatorial regimes. There have been a succession of PBA leaders that have dutifully taken the stage with a succession of Democrat governors, endorsed their tax increase proposals, got their picture taken with the governor for their “vanity walls”, and promptly moved across the river to Vancouver upon retirement to escape the burden of their own actions. For the banks and utilities tax increases are an automatic pass through to their Oregon customers. They do not compete outside of Oregon and, therefore, do not suffer a competitive disadvantage because of high taxes.

The Oregon Business Alliance is the brainchild of Nick Blosser, one time finance chairman for the Democrats and husband to former House Democrat Leader, Deborah Kafoury. He was joined by Linn Lundquist, a former Republican Speaker of the House who was rejected by his own party for a second term and was then rejected again by his party for a gubernatorial bid. Given Lundquist’s high profile support of every Democrat economic proposals since his rejection by his own Republican Party, one has to wonder whether it is warped principle or wounded pride that drives his actions. Lundquist boasts of a master’s degree in agricultural economics but he apparently didn’t attend those classes which discussed how tax increases impose a competitive disadvantage on Oregon’s agricultural community vis-à-vis agricultural interests in other states.

But the surprising aspect is that they have been joined by the Associated Oregon Industries. Ever since the retirement of former AOI President, Richard Buttrick, the association has begun to migrate toward the same policies as the Portland Business Alliance and Oregon Business Association. That’s not surprising given the overlapping directorships of the same banks, utilities and insurance interests on AOI’s board of directors and the waning support of the former powerful timber industry.

So who represents main street business interests? Well, most assuredly not them. Before anyone assumes that business supports this latest tax increase, you might want to ask the National Federation of Independent Businesses, the local chambers of commerce, the Oregon Taxpayers Association and the various trade association representatives. In fact, let’s make it easy, call your local merchants and ask them what they think of this increase in taxes on main street business.

So why do the Democrats need this tax increase? Mostly, it’s because they are Democrats and they have this insatiable urge to raise taxes. They haven’t been in the legislative majority for a dozen years and the itch has simply become uncontrollable. Yes, I know, they say they need it to fund a “rainy day fund.” Nice try but the state is currently awash in tax revenues. This legislature has nearly $2 billion (that’s BILLION with a “B”) more this biennium than last and the pot is growing with each succeeding revenue forecast. A rainy day fund isn’t a bad idea but in this instance it is just another tax increase on business because there are already sufficient funds to pay for it and all the other legitimate increased spending that will be considered by the legislature.

But that’s not the whole story. The Republicans have floated a plan that would exchange elimination of the kicker for business for a reduction in the capital gains tax and the inheritance tax and still create the rainy day fund. Not surprisingly the Democrats are ignoring it because it means small businesses might get a break. Not surprisingly, the Portland Business Alliance, the Oregon Business Association and AOI appear to be similarly ignoring it. Is a picture with the governor really worth ignoring your real business interests?