M97: A TAX, ON A TAX, ON A TAX . . .
Q: How will Measure 97 affect your tax bill?
A: "It doesn't. Because we're a limited liability company, we will not pay the tax directly, but we do think it's very damaging to our business because it's going to have an impact on many areas of costs — especially overhead costs.
"Measure 97 is a tax on sales, not on profits, so it'll be passed on to consumers throughout the state. That will have an impact on the economy and especially for us, I'm anticipating it will increase our costs for electricity, heat, gas, building materials, appliances, phone and internet service, business services — many areas of our costs. A company like ours in the construction industry, insurance is a huge cost item for our business already. Those costs are all going to impact our business. Even though we are not a C Corp and are not at the level of sales that we would pay this tax directly, we feel it's going to affect our costs.
"Then, that will lead us to having to raise our prices, how we price our remodeling and repair work on homes. That'll have a negative impact on our business.
"We do a lot of remodeling for businesses, retail stores, restaurants. I'm worried about the impact on those customers and their ability to take on new projects or expand. Will they be able to grow and thrive if their costs are all higher?
"The other issue is our employees are going to see costs for their families, food, electricity — a lot of the same costs to businesses are even more important, they're necessities like food and medicine. Those areas are probably going to go up for most people. It's already hard for young families to survive in the Portland metro area and this is just going to make it harder."
Q: Are there other costs headed your way?
A: "The way I look at it, Measure 97 is a tax on sales, so it's going to be assessed at every different level of the production process. It's hard to predict. For raw materials, then each stage of manufacturing or production — especially if those are in different companies and not all within the conglomerate — every time it passes through another company, it's a tax on a tax through distributors and then to the final sale.
"It's really hard to predict how high it will be for some products: the more something is made within Oregon, the higher the compounded effects of those taxes is going to be. I think it's going to put Oregon at a disadvantage."
Q: Have any other states enacted similar legislation that affect you?
A: "We do a small amount of business in the State of Washington. They have business and occupation tax. It's a gross receipts tax, but it's a fraction of the size of this 2.5 percent. For my category — it's different for each type of industry — I believe that it is about one-tenth of the size for my industry. Then we also just don't do that much work in Washington. It's based on how much work you do there. We often get the small business tax credit because we're not doing a volume that's large enough, so we're not even paying it.
"They have a number of credits including a small business credit, but the other thing is they don't have an income business tax there. My experience in Washington is that tax is relatively small, and doesn't have as negative an impact."
Q: Can you survive?
A: "We would definitely have to make adjustments to survive. That's something we do all the time through boom and bust and all kinds of changes. As a business we face constant change. What concerns me is those adjustments may mean laying off people if we have less work, or cutting costs might include employee benefits.
"I've always been really proud of the fact we provide 100 percent health insurance premium as well as paid time off, holidays, good compensation and a retirement plan.
"We'd have to look at where we'd have to make cuts, especially if our work volume drops off. People need to have jobs to afford a remodel of home improvement."
Q: How does this jibe with your personal politics?
A: "I support paying taxes to go to schools, social services, roads and all the things that help our community be a better place to live. Our children attended public schools in Portland and it provided a great foundation for them and their lives. I supported funding for schools in different ballot measures and levies. For the last bond measure for Portland public schools I went door to door campaigning for the bond measure. I've definitely always been a supporter of the schools.
"You need jobs and growing economic activity to pay for education and other public services. I feel Measure 97 is really damaging and could have a negative impact on schools and other public services. There's no guarantee in the measure the money will go to support schools, seniors and social services. It's basically a blank check for politicians to do whatever they want. I'm very much opposed to Measure 97."
Q: What can you do about it between now and November?
A: "I'm volunteering with the "No on 97" campaign. It's important for people in the community to understand that it is a tax on Oregon sales and it'll have an impact on all businesses and all consumers.
"Most states that have a regular sales tax have exclusions for food, medicine and other necessities. This measure has none of those protections for average families and has the most severe impact on low-income households that are least able to pay. It's important to share what these impacts will be.
Q: Any other specifics about the way M97 is worded?
A: "If you look at the actual text, it does say that it is a tax on sales. I think that it has been lost in the way it's described by the proponents. It's often described as a tax on large, out-of-state corporations, but if you read the measure it's a tax on Oregon sales and I think people should know that and understand what that means for what they're going to pay for things and how it's going to impact their families."
Q: Is there any way to get around the tax?
A: "The main thing to do is just defeat the measure. Then we can have a conversation where we bring all the parties to talk: business, labor, communities, social services, education and legislation especially, and ask what can we do to solve this problem of school funding? It's something we've been working on for years and there's no one solution. It might take more than one thing to help resolve this issue. The first step is to defeat the measure. It's going to be very damaging for the economy and many households."