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Spreading rumors about business relocation hurts state

Portland Business Journal
April 23, 2010By Steve Robinson

Although many business owners supported the enactment of Measures 66 and 67, it’s no secret that the tax measures received robust opposition from others in the business community. In the aftermath of the election, there have been scattered reports about business owners claiming they or their brethren are considering leaving the state.

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So far, no business owner has stepped forward and said that moving vans have been called and that Measures 66 and 67 are the reason, not just a convenient excuse.

Still, rumors of businesses leaving for greener pastures don’t serve Oregon’s economic recovery. Business leaders would better serve their own interests if they spoke out against what’s really just sour grapes about losing the Jan. 26 election.

For all the heated rhetoric, taxes are a minor factor in business location decisions. A great deal of research has shown that factors such as access to customers and suppliers, the quality of the work force and transportation and other infrastructure are much more important to businesses in terms of deciding where to locate.

As recent examples, BMW located in rural Washington because of hydropower costs and Genentech chose Oregon because it wanted to establish a distribution center away from its research and development facilities but close enough for easy travel.

More important than taxes are the structures that facilitate commerce. If Oregon’s courthouses were open only four days a week and if our bridges were being closed for safety reasons, would you find Oregon an attractive place to set up shop or expand an existing business?

Also consider the possibility that the measures are good for business. They are bringing federal matching funds into Oregon’s economy, money that would have been left on the table had the measures failed at the ballot box. The bulk of added business taxes fall on large, out-of-state corporations that won’t even notice the tiny percentage reduction in their bottom lines. Rather than leaking out of the state, that tax money is circulating in our economy, reaching the pocketbooks of Oregonians. They, in turn, spend it on Oregon businesses, increasing their profitability.

But even if you are not persuaded that the measures are good for business, where would you move? To Washington, with its high sales and gross receipts taxes on unprofitable businesses? To California, with high sales taxes in addition to income taxes — including a “millionaires’ tax” — and public services being shredded as the result of political paralysis?

The fact is, even with Measures 66 and 67, Oregon’s business taxes are still among the lowest in the nation. According to the Council On State Taxation, a lobbying group for about 600 large corporations, in 2009 Oregon tied with two other states for the lowest ratio of state and local business taxes to private sector income in the nation.

This year, 41 states confront revenue crises that will require tax increases or deep budget cuts, or both. Oregon, however, is not among that majority of states facing a current budget crisis, thanks to Measures 66 and 67. That stability is certainly good for business.

Sulking over recent election results and promoting rumors of a phony exodus won’t help improve Oregon’s business climate. Recognizing and talking up our advantages over other states, by contrast, just might help Oregon and your own business move forward.

Steve Robinson, MBA, is a policy analyst at the Oregon Center for Public Policy and former manager of businesses in Oregon and California.

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