Oregon Business Plan for the Loophole Lobby

Chuck Sheketoff

Here they come again. The Loophole Lobby is gonna be in Portland.

Meeting at the Oregon Convention Center on Monday, December 6, the Oregon Business Council-led Oregon Business Plan is having their annual we-need-all-the-government-help-we-can-get lovefest, complete with (1) convenient amnesia about how the Oregon economy led the nation in growth in the mid- to late-1990s without some of the tax loopholes they now defend and seek to expand, (2) irresponsible demands for increased government spending, and (3) a relaxed regulatory environment.

You know the Loophole Lobby: Intel, Nike, PGE/Enron, Columbia Sportswear, and others who successfully push for tax breaks; who have yet to give up the $43 kicker tax cut that’s currently scheduled to go to the most profitable Oregon businesses; and, who have no shame and no plan to remedy the fact that two-thirds of Oregon’s corporations contribute only $10 in taxes on their profits in support of our education, health care, and other unmet needs.

Undoubtedly, one outcome of the Oregon Business Plan meeting on Monday will be a call for more investments by state government in education. The Oregon Business Plan is a great example that government can and does play an important role in the economy of Oregon. Heck, that’s why a host of politicians will be given center stage. They have a difficult time mouthing the words, but business needs government.

Sadly, I predict the Loophole Lobby will show that they will accept little or no additional responsibility for helping pay for the additional government spending. In fact, along with the spending proposals, you will also likely hear calls for more tax loopholes. And these new calls for tax loopholes will ignore the $43 million tax cut the most profitable Oregon businesses are slated to get just because a state economist and his team of advisors from the public and private sector weren’t able to predict precisely a two-year economic future back in mid-May, 2003 shortly after President Bush declared “mission accomplished” in Iraq.

The Loophole Lobby knows that good public services help create a good business climate and more profits; we will likely see proposals for more tax dollars spent on public services to increase their corporate profits and payments to shareholders. But the Loophole Lobby wants other taxpayers to shoulder the costs of the new investments in the public services that increase their corporate profits and payments to shareholders.

The Loophole Lobby can be shameless. They are the folks who tried last session to get the Oregon Legislature to allow the wealthy individuals who run venture capital firms and certain college researchers who land big government grants to avoid paying any personal income tax. Let’s see if they push that crazy idea again, or whether they will finally recognize that Oregon has many higher and better priorities, such as giving support to the disabled and elderly or providing child care for working poor families. Tax freedom for wealthy venture capitalists and successful university researchers can't really be a priority for Oregon's spending, can it?

The Loophole Lobby has no qualms about the fact that two-thirds of Oregon’s corporations pay less in taxes than an unemployed worker pays in taxes on his or her unemployment insurance payment. I’d love to be proved wrong, but you won’t see a plan for reform of the corporate minimum tax coming out of the Oregon Business Plan meeting. The Loophole Lobby helps create these freeloaders.

The Loophole Lobby exaggerates the impact of taxes on business location and expansion decisions. To hear them talk, taxes are a significant burden and reducing them creates a significant incentive. They ignore the fact that all state and local taxes paid by businesses in the country account for only 0.8% of their costs. Put another way, if all state and local taxes paid by businesses were totally eliminated, the costs of doing business would go down by less than one percent. Paul O’Neill, President Bush’s first Treasury Secretary, said “I never made an investment decision based on the Tax Code.” The Loophole Lobby’s arguments just don’t add up to much while their policies are costly.

The Loophole Lobby’s coming to town. Watch your wallet.



Chuck Sheketoff is the executive director of the Oregon Center for Public Policy.   You can sign up to receive email notification of OCPP materials at www.ocpp.org

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    Fascinating post. Someone should email this to Brainstorm NW and see what they say.

  • Liz Trojan (unverified)

    I concur. Great post by Mr Sheketoff and it would be great to see his article published in one of the major papers. However, Brainstorm NW would never touch this article. They are rabidly pro-business and they would classify this article at anti-business.


  • Steve Schopp (unverified)

    I realize that this posting may be simply too much for this group to ponder. The naysaying, negative nature of it will likely be too much.
    However, I believe the collective totality of Oregon troubles requires collective consideration.

    It has become exceedingly obvious that Oregon leadership, while meddling with the trees is unwilling to consider the forest.

    Here is my brief summary of the Forest. As the status quo'ers work to repeat every mistake, the Oregon utopia is about to burst. Indicative of this is their view that M37 has a or narrow message.

    In the bigger picture they are about to face measure 37 in everything they have touched.

    M37 is a dramatic example of the reaction to the imaginary utopia which in clear view is actually dysfunction.

    And of course, no surprise that cities are busy adopting punitive measures to defend the punitive land use policies causing much of the dysfunction.

    Their fatal mistake is tackling this issue as a stand alone problem.

    As we move towards another round of legislator bobbing, weaving, grabbing and shoving no signs of genuine revelation are to be seen.

    The predictable pretenses, posturing and delirium are being delivered right on schedule by editorial boards and various groups dedicated and addicted to more of the same.

    But how will the this work out. Will the advocates for affordable housing eventually punt the planning gurus because there is not one thin dime to provide what insane planning took away?

    Imagine at the same time, downtown Portland torn up for a new transit mall and businesses hollering, South Waterfront reaping nothing but towers for the wealthy, snarling traffic, a rat race of dysfunction and not one biotech job.

    Mix in the multibillion dollar PERS drain. Pile on the Oregon Health Plan floundering and begging for dollars.
    Throw in TriMet's unfunded retirement fund, Inadequate genuine industrial land, Portland's employee health insurance fund gone, Randy Leonard's police and firemen fund fantasy bursting, the Port of Portland with idle berths and hobbled commerce during a west coast shipping boom, Metro bureaucrats studying east side trolleys while the region's transportation system slips further into chaos, OHSU (following the lead of the new Multnomah County jail), unable to outfit and staff their newly completed multimillion dollar building, their budget slashed yet a new $34 million dollar Tram is on the way,
    the State Mental Hospital closing,
    College tuition increases, burned out forests left to rot,
    K-12 in pandemonium over programs which don't work and no money to keep them going,

    And Governor Kulongoski and pals looking like deer in the headlights when not even paying businesses to come here is enough. (news report,"details of other incentives were not released")

    Yes, quite a picture dead ahead. In living color and high definition.

    Now what about that The Leadership Summit and the Oregon Business Plan will provide anything more than a reassuring pat on the head.

    Mike Burton's State of the Region Speech, 2000 "Traffic congestion is bad and getting worse. It is a nightmare for commuters and it is choking freight mobility. There is no more clear illustration of our inability to meet growth needs than our failure to address our transportation needs. Within the transportation arena we are facing utter chaos."

  • Ron Ledbury (unverified)

    Why couldn’t we reduce the cost to business by reducing the hyperinflation for housing? As any economist knows . . . the costs facing workers affects the cost of labor. We could give workers a raise by reducing the price of housing, and the businesses would get to share some of this benefit.

    Do not forget that the federal government can get a deficiency judgment for the difference between the amount home buyers owe and the amount recovered from a foreclosure sale. Government aid on interest rates to the poor do nothing more than saddle a person with greater exposure to a lifetime of personal debt to the government in the event of a drop in home prices at the same time they might lose a job.

    How would we reduce the price of housing? One way would be by removing the loophole that allows for public assistance for home loans in excess of 350,000 dollars (FHA type loans), and the tax code that rewards borrowing through tax deductibility for mortgage interest. If FHA loans were limited to 100,000 dollars in assistance how would the local governments react? They would react with horror because they feed off of rising home prices through property taxation and through the use of the property as collateral for unrestrained borrowing.

    Chuck, quit thinking of government as the place where winners are picked or not picked and think of government as the place where the rules of the game are set fairly for all. Home debt is one of the biggest obstacles to workers becoming capitalists themselves. The cost of homes, and the consequent perceived necessity of obtaining higher wages to compensate, is the primary cause of the giant sucking sound of jobs leaving the United States and Oregon too. Residential home values are not an asset, they are dead investments, unless of course you are a big rich guy looking for an opportunity to lock some poor slob into a 30 year plan to cough up one-third of their income.

    If you are left, and favor the poor, then let’s have some wisdom rather than a plan to feed off one another like cannibals.

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