Not giving up after his first attempt at reforming Portland’s Business License fee last year, see how Portland City Commissioner Sam Adams wants to perfect the business tax system ‚Ä¶
Before Portland City Commissioner Sam Adams began is presentation, he listened to concerns of Southeast Portland business people.
By V.M. Wells with David F. Ashton
City Commissioner Sam Adams took his drive to lighten the business tax burdens to a meeting of small business people, including those from inner Southeast Portland, on November 2 at a Gateway-area restaurant.
The commissioner started off by showing pages of charts and graphs depicting Portland’s economy and business demographics compiled by Warren Jimenez of his office.
Adams began his presentation by showing a dazzling array of demographics depicting the city’s business climate and financial position.
Adams said, with pride, that Portland “still has a lot of small business” ‚Äì and that Portland business has not been taken over lock, stock, and barrel by chain store operations or other out-of-city firms. Many cities, he warned, have lost a lot of their local business.
But, he added, the region is becoming more prosperous but the City of Portland has not.
He reported that 34,000 businesses paid $31.1 million in license fees in 2004, the last year for which figures are available. He estimated that the fees have yielded about $54 million this year, even though most businesses in Portland gross $200,000 a year or less.
Adams revealed that Oregon has the lowest state tax burden on business among the 50 states. But, Portland has the heaviest burden in the state, he added.
In the last five years the number of jobs in the region increased by 3.6 percent, but in the same time Portland lost 1.8 percent of its jobs, explained Adams. And, family incomes are slipping in Portland.
In Multnomah County as a whole, he said, 94 percent of businesses hire 50 workers or fewer; small business, taken as a whole, hires 125,000 workers.
Sam Adams told the group the purpose of is proposal was to fine-tune the city’s business tax system to make it “more fair”.
Adams tax fairness plan
The City Commissioner then shared five different ways the city’s Business License Fee (BLF) might be adjusted to make it “more fair”.
Regarding the difference between a fee and a tax, Adams said in passing, “A business fee is a tax, let’s face it.”
His proposal to “refine” the BLF would reduce the burden for more than 9,000 smaller city businesses; about 900 of the largest concerns would see their annual tax bill increase. Adams estimated that 59 percent of Portland business would benefit from his plan.
Adams said he wants the city council to raise the exemption below which no business tax is due from $25,000 a year to $50,000, and do it by the end of the year. And, he said, he wants to raise an exemption–the “Owner’s Compensation Deduction”–from $60,000 to $125,000 by the 2008 tax year. However, he does not ask for lower tax rates than the present 2.2 percent on net profit.
“We can help more by raising the owner’s exemption than by lowering the tax rate,” Adams explained.
Adams indicated that the license fee is not fairly applied, declaring that hundreds of businesses which gross more than $1 million a year pay only $100 in business tax. “Some of you are paying more than that, even though you don’t gross $1 million,” he said. “That is unfair.”
At the same time he quoted economists as estimating that eliminating the tax would add 1,500 jobs in five years.
Ken Turner, Governmental Affairs chair of the East Portland Chamber of Commerce commented, “There is fairness in [Adams’] plan.”
David Panichello, president of the Gateway Area Business association and owner of Opti-Con, suggested that stricter enforcement of the tax law is needed. But Adams said the city spends $1 million a year on enforcement and a study has found that it is about 98 percent effective.
Asks for business community support
Adams said he plans to take his plan before the City Council before the end of the year, perhaps early as the end of November. He hesitated to speculate regarding which council members might support his reform plan.
“If you agree the BLF needs reform, come down to City Hall when I present the plan, and show your support in person,” Adams urged the group. “It really does mean a lot when you come, either to testify, or just be there to show your support.”
¬© 2006 David F. Ashton ~ East PDX News