Measure 97 could mean the end for Powell's Books
Emily Powell, President and Owner of Powells Books, says the proposed Gross Receipts Sales tax affecting companies in Oregon with more than $25 million in annual sales would apply to Powells and would ruin the company.
Answers were edited for clarity and brevity.
How would the proposal affect the Powells Books tax bill?
Were challenged every year already to figure out how were going to be viable for the next year, and this is about a fifty times increase on our current tax bill. We dont know how were going to pay it. Were relatively low above the $25 million mark. If youre over 25 you are all the same.
Are there any other costs?
The challenge for all of us, and for the small businesses too, its not just the bill for the 2.5 percent tax, I fully expect our power bill will go up, many of our utilities will go up, and probably some of our cost of goods will be impacted. I fully expect our margins will go down from some of our suppliers because theyll be impacted as well its going to hit us in a lot of places. Pacific Power have already said theyll be passing this increase along as a price increase. Were not sure yet but some of our publishers and wholesalers will be impacted, and they may now say, instead of offering us a previous discount, they may say were going to have to cut that.
Random House sells a lot of books in Oregon, and they, or our main distributor, Ingram Content Group, will be impacted, and if nothing else they will be impacted by these other costs, power and utility increases etcetera.
Have any other states enacted similar legislation?
We dont have enough of a volume in any other state to be impacted. My understanding, from a report by the Oregon Legislative Revenue Office, is other states gross receipts taxes are dramatically smaller, like much less than one percent. This is the most massive gross receipts tax I believe nationwide. So while we may be involved in other states where that tax is present, we havent felt the impact.
What can you do? Lobby politicians?
Were not being quiet about the fact that this could have a devastating impact for us. Frankly, Im equally concerned about the rest of the community, and Im equally concerned about where this money is going. Its a shocking remedy, and I dont think it is a remedy. As a businessperson I would never say We have a problem in this certain area, and just write a blank check for $1,000. Wed stop, work on it, analyze it, and figure out what might cost to solve this problem, and then figure out how to make do with a little less. This is the total opposite approach, its Heres $6 billion, go spend it. But theres absolutely no accountability, it just goes into the general fund. To me its shocking, its a huge price tag and I dont anticipate that its going to be successful. We are working with the campaign, talking to our employees so they understand what were facing. We dont typically get involved in politics as a business because we want to feel we are an open institution for everyone, but this one feels so important we have to pull ourselves off the sidelines. Were still figuring out how we are going to use our voice.
Can you survive?
We havent yet been able to answer that yet. There arent many places to cut money. Itll have to come out of services, meaning will we have to decrease hours, customer service, inventory? Or personnel, because thats everyones biggest bill. Its an area were going to have to consider. And thats the other concern, what kinds of job cuts will Oregon see?
Can you just put the price of books up?
Other businesses may be able to, but we cant. Our new books, the prices are set by the publisher, the prices are printed on the outside of the book. And were already challenged to be competitive against national companies. Amazon, Barnes & Noble, Costco, Walmart all sell books. So to say theres this tax in Oregon that requires us to raise prices dramatically makes us dramatically uncompetitive. Im going to be suffering even if I do raise my prices, I dont know by how much. And then Im going to see a steep sales decline because people dont want to buy my books. So Im in a whole lot of trouble.
How about raising the prices of used books?
Theyre less expensive, so to make up the that gap Id have to raise them, might not be 20 percent higher, it might be 200 percent higher, I dont know. For us, the price increase isnt going to work. Its not even remotely possible. I say this without trying to be dramatic, I dont know how we are going to pay this bill. Yes, we could shrink the company but wed still owe 2.5 percent, you have to pay this bill. We want to provide the same service to our customers we always have, to be competitive. I dont have an answer.
How is your father (Powells Books former boss Michael Powell) taking this?
He is equally scared, we are not sleeping very well over here.
How does this jibe with your personal politics?
Im not sure how we define whats a big company or a small company, a good company or a bad company. Were all providing jobs, were all providing benefits, were all trying to be good corporate citizens and good citizens. I think there are a lot of Oregon family businesses that dont yet get the implications of this bill. I think the fallout will be much large than anticipated. We wont understand it until its explained.
What can you do about it between now and November?
Im not giving upon any avenues, politicians are campaigning right now, so I am talking to everyone I can. Weve met with (Governor) Kate Brown and her representatives. Shes considering it.
We have to talk to the community and voters and help them understand that a bad idea never helped a good cause. We all agree the tax system is in trouble and needs fixing, and our schools are in trouble and need revenue, but this measure isnt the solution. This money is just going to the general fund, so how do we know who its helping? I want to solve education in this state, but I dont have any guarantees that this money is going to do anything remotely helpful. And I dont have it anyway! If I did have it Id still be concerned.
Were expecting that the average family would see $600 a year out of their pockets every year just in price increases: groceries and utilities. Thats a lot of money. Ill probably see a sales decline from that impact alone.
Any other specifics about the way Measure 97 is worded?
I dont see a lot of upside. Theres nothing in the bill that says this money goes to schools. We have to have more than a conversation, we have to get down to work on solving the problems that this bill is interested in addressing, but we have to find another solution.
A lot of voters out there want to make a difference, they see the problems and say this is at least something, I dont think it is. I think its a big, potential injury to consumers and businesses without solving the problem.
What is Measure 97?
Measure 97 (formerly Initiative Petition 28), a looming ballot measure that, if passed in November, would represent the largest tax increase in Oregons history.
It would bring in an estimated $2.65 billion in new money each year.
Measure 97 is being backed by public employee unions and others, including education and social service advocates.
Businesses and others caution that placing such a large sales tax on C-corporations will hurt the economy by raising the costs of consumer goods, including essentials such as food and electricity, and driving some companies out of Oregon.