January 10th, 2010 | by NIGEL JAQUISS News | Posted In: CLEAN UP, Politics

How Tax Opponents' New Letter Is Misleading

OregonCapitol

The latest letter [PDF] from the group opposing two tax increases on the Jan. 26 ballot is now circulating.

There are at least two notable aspects to the letter dealing with Measures 66 and 67: First, one of the primary assertions in the letter is misleading, according to the Legislative Fiscal Office, the non-partisan state agency that crunches the numbers on state expenditures.

"So why does state government say they need $733 million in new income taxes?" asks the letter from a woman who signs her name "Wendy Calkins, CPA." Calkins answers her own question. "They are also using the $733 million to help fund $259 million for state employee salary increases."

Tax opponents have repeated this implication during interviews and in their ads that in 2009, Oregon lawmakers granted public employees $259 million in raises. But is it true?

WW and other media have asked the Legislative Fiscal Office whether the 2009 Legislature did give public employees a $259 million raise. The answer [PDF] in a Jan. 4 memo is "no." Actually, lawmakers reduced public employee compensation from previously agreed upon levels by instituting wage freezes and 10 to 14 furlough days. "The estimated 2009-11 biennium personal services cost savings relative to salaries as of June 2009 from these actions is $27.4 million [savings from the] General Fund," according to a Jan 4. LFO memo.

The second interesting aspect is the identity of the letter's author, Wendy Calkins. Campaigns often try to line up regular people as spokespeople but tax opponents seem to have had a tough time finding an average Joe or Josephine to sign their letters. An earlier communication from the "no" side turned out to have been written by a well-heeled Tillamook dairywoman whose family's exotic travels undercut her message. Similarly, Wendy Calkins does not appear to be one of those small business people who is just scraping by. Deschutes County property records show that Calkins owns a 7-acre Deschutes River front estate in Terrebonne that a current real estate listing describes this way:
Lodge Style Home on private 7+ acres on the Deschutes Riverfront. Majestic Mountain & River Views. Gourmet Kitchen w/Large Island/Granite slab top, double ovens, warming drawers & more. Plus Outdoor Kitchen & Bocce Ball Court. 4 Car Garage with Shop Area & Work Out Area. Excellent craftsmanship, 3BD, 3.5 BA. 5,628 sq. ft. home with built in Speakers throughout. Theater Room with 131'' Screen. Lower Level has it's own half kitchen, bathroom and living space. Excellent Fishing & Hiking right below home!

The fact that Calkins lives in spectacular circumstances does not disqualify her from opining on Measures 66 and 67 but her using her C.P.A credentials to assess the measures would seem to require a level of accuracy when she makes assertions such as "I know that small businesses in Oregon will be forced to lay off workers, reduce wages and benefits or completely close these tax increases."

That is a wild claim, and not supported by the Legislative Revenue Office's analysis [PDF] of Measure 67''s impact. The measure would raise the corporate minimum tax from $10 to $150 and increase the income tax on companies with profits of more than $250,000 from 6.6 percent to 7.9 percent. Most small businesses in Oregon are either sole proprietorships, which don't pay income taxes now and will not even if Measure 67 passes; partnerships, or S-Corps. all which will pay the $150 corporate minimum but no additional taxes if the measure passes.

Even among those employers organized as C-Corps, which are subject to income taxes, Legislative Revenue Analysis analysis shows the vast majority of small businesses (which it defines as have sales of $1 million or less annually) would pay the corporate minimum tax of $150.

If the increase on small employers' tax burdens from $10 to $150 is enough to cause them to "lay off workers, reduce wages and benefits or completely close their doors," as Calkins asserts, they've got far bigger problems than the tax measures.

Ballots for the special election are in the mail now and are due by 8 p.m. on Jan. 26.
 
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