Co-chairs Barnhart, Burdick and Berger and members of the Joint Interim Committee on Economic Development,
I am here on behalf of the Emergency Coalition Against Austerity and
the affinity groups to which I belong: Tax Fairness Oregon and Oregon Save Our
Schools.
The foremost reason this committee should oppose the
Economic Impact Investment Act is because secret deals are decidedly
undemocratic. The democratic
process demands a thoughtful debate. Having a public hearing to both introduce
this bill and its amendments will not allow this.
But I will elaborate further on why this bill is bad. According
to classical economic theory, Say’s Law states, “Supply creates its own
demand.”[1] Accordingly,
profit-seeking businesses will hire job seekers willing to work for a wage that
doesn’t exceed their productivity.
Oregon businesses that hoard their profits in
offshore shelters[2] and pay
their executives exorbitantly[3]
disrupt supply and demand. Why should Oregonians support tax favors for these
corporations, especially when under- and unemployed Oregonians can’t buy their
products?
Tax expenditures require only a simple majority
vote. Raising revenue is far more difficult since a 3/5-majority vote is
necessary.
If there is a silver lining to this special session, it’s
that that Oregonians are beginning to understand that corporate tax loopholes are
trade secrets.
Favorable tax policy yields returns on investment for which the tax accountants
and attorneys are well paid. According to the most recent data available[4], the New York
Times estimates Oregon spends at least $865 million per year on
incentive programs.
This figure does not include the economic benefits of the single
sales factor method of apportionment! Alarmingly, this Act codifies the single
sales factor for qualifying corporations for up to 40 years and enacts “action
for a breach of a qualifying investment… against the State of Oregon.”[5]
Where are the clawbacks and penalties for corporations that
don’t keep up their end of the bargain? For that matter, what is their end of
the bargain?
It’s worthy to discuss proposed amendments as global
remedies to address tax fairness. Oregonians need to know how this bill defines
new job creation and sets quality standards. [6]
These metrics must be reported in an easily accessible manner.[7]
Reporting and disclosure[8]
must be thorough and include a summary of the corporations’ total taxable income and amount of taxes paid in
Oregon. Any provisions of this Act
deemed unenforceable in a court of law should not affect the validity or
enforceability of other provisions in the Act.[9]
Oliver Wendell Holmes, Jr. famously said, "Taxes are the price we pay for civilization." Unjust tax
policy can be an act of barbarism.
Respectfully,
Kris Alman
p.s. I apologize that the reader cannot "see" links to the amendments. They are simply not available.
[1]http://wps.aw.com/wps/media/objects/11/11640/rohlf_keynes_and_classical.pdf
[2]http://ctj.org/ctjreports/2012/10/which_fortune_500_companies_are_sheltering_income_in_overseas_tax_havens.php
[3] $10.83 mil
total compensation; $50.81 mil 5-year compensation http://www.forbes.com/lists/2012/12/ceo-compensation-12_Mark-G-Parker_X0NY.html
[4]
http://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html?pagewanted=all&_r=0
[5]http://www.leg.state.or.us/12ss1/genInfo/LC0001_DRAFT_2012_1st_Special_Session.pdf
[6] See “Job Creation Standards” and “Job Quality Standards”
amendments; http://www.goodjobsfirst.org
[7] See “Public
Records” amendment
[8] See
“Taxpayer Right to Know on Jobs Amendment (Reporting and Disclosure)”
[9] See
“Severability” amendment
