Tax boost blues
Company president, area elected leader voice concerns about plan to hike corporate tax fees in Oregon

By Larry Meyer
Argus Observer
LarryM@argusobserver.com
Wednesday, September 23, 2009 10:35 AM PDT

Crews from Mike Becker Construction, La Grande, work at a site in Ontario Tuesday. At least one area businessman is worried a proposed tax hike on the earnings of firms in Oregon would hurt his ability to be competitive.

ONTARIO — One Ontario businessman said if the proposed state corporate tax boost withstands a referendum vote, he could be forced to close his shop and move into Idaho to stay competitive.

Dick Warrington, owner of Warrington Irrigation, said the higher corporate tax rate approved by Oregon lawmakers in the spring will put him at a disadvantage against competition from the Gem State. Under the new proposed tax fee, Warrington said he is looking at an 11 percent tax increase on his annual sales.

“We have to compete against Idaho,” Warrington said.

In the waning days of the last legislative session, lawmakers OK’d higher taxes on corporations and individuals in upper income brackets under a blueprint to generate more than $730 million over the next two years.

The tax plan, though, is already on the cusp of going before voters and opponents have until the end of this week to get enough signatures on petitions to place it on the November election docket.

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Rep. Cliff Bentz, R-Ontario said the increased tax will put the state at a disadvantage when recruiting business to Oregon.

“It’s going to be a negative signal to new companies not to locate in this state.” he said. “It’s going to leave a chilling effect. Companies will look someplace else.”

For Warrington, the political assertions regarding the impact to businesses from a tax are up close and personal.

He said the tax hike would put him at a disadvantage because there is no sales taxes on agriculture equipment, he said, and the new tax could make his costs higher than those of competitors in Idaho.

“I will have to close or move to Idaho,” Warrington said. “I can’t pass it on. I have to compete with Idaho. I don’t think people really understand this.”

Lost in translation

Warrington may have a point. While the tax hike has ignited plenty of debate on the state stage, locally, in many ways, it has been business as usual.

And several interviews Tuesday with area residents and merchants verified the issue is not well understood and some simply did not know about the tax legislation.

One area farmer, though, did know about the legislation but said the tax boost probably would not hurt his operation.

“It won’t hurt our farm,” Roy Hasebe, Ontario area farmer, said. “We’re a medium-size farm.”

He estimated his minimum tax would be in the $500 to $1,000 mark per year.

 However, it would be a different scenario for a business that does a tremendous amount of volume, he said, and, in the case of packing sheds or processors, that extra tax would probably be passed on to growers.

“Businesses and the self-employed will be concerned about this,” Hasebe said.

Hasebe also said he worries that the corporate tax hike will cause businesses to move out of state or chase businesses away.

Andrea Testi, director of the Small Business Development Center at Treasure Valley Community College, said the possible impact could be that if a small business owner was considering hiring another employee, “they won’t now.”

Petitioners are also working to put a 6-cent per gallon fuel tax increase back on the ballot as a challenge to the legislative proposals and an increase on vehicle registration fees. Bentz attempted to have farm vehicles which are only used a few months out of the year exempted from the registration fee increase, but only managed to have the increases on farm trucks reduced.