Accountants and Journalists: Get the Facts Straight on the Revenue Measures and Stop Scaring People!
Dick Warrington was understandably concerned. The owner of Warrington Irrigation, Inc. in Ontario, Oregon had been led to believe — by his accountant and campaign literature paid for by banks and large corporations — that as a result of the corporate tax measure enacted by the 2009 legislature, his business would see a steep tax increase. According to the Argus Observer, Mr. Warrington “could be forced to close his shop and move into Idaho to stay competitive.” *
I spoke with Mr. Warrington this morning. He’s an open-minded, forthright and honest guy. And as we talked he and I quickly learned that Mr. Warrington had been misled and needn’t worry.
I asked Worthington if his business is an S-Corporation — “Does Warrington Irrigation, Inc. elect not to pay federal corporate taxes and pass through its profits to its shareholders as an S-Corp?”
“That’s right,” he said.
I explained that because his business is an S-Corp it will only pay $150 in Oregon corporate income taxes, up from the $10 it’s been paying. In other words, his taxes will only go up $140. (If his business had been a partnership or limited liability company (LLC) it would have to pay just a $150 entity tax, as well, up from $0. If he were a sole proprietor there would be no additional cost. )
Mr. Warrington said with a tone of relief, “I can handle that” and then offered to buy me a beer if I get out to his neck of the woods because he’d been worrying about the corporate income tax measure and I had put him at ease.
And unless Mr. Warrington and his wife have a combined yearly taxable income of $250,000 or more, his personal income taxes won’t go up a penny. I don’t know or care to know how much money they earn each year, but when he learned that fact about the personal income tax measure he convinced me, and I assured him, that they wouldn’t be affected by that measure either.
It’s understandable that Mr. Warrington was confused, given the level of misinformation the banks, large corporations and the out-of-state organizations meddling with our referendum system have been pumping out with their $1 million war chest and help from the Oregon Republican Party.
It’s a shame, though, that accountants and journalists who have a responsibility to read the actual measures are also confused and are scaring people like Dick Warrington and the public by not asking the right questions and drawing false conclusions.
The legislature targeted large corporations and wealthy couples, not the Dick Warringtons nor small businesses such as his. That’s why Oregonians need to vote “YES” on the measures if they make the ballot. That's the story accountants and the journalists need to tell.
* If he moved his business to Idaho but kept customers in Oregon he’d still be paying Oregon taxes apportioned based on Oregon sales versus out of state sales.
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