Bill would reward Oregon-based businesses.

Byline: Pat Farr For The Register-Guard

The Register-Guard's May 5 editorial, "No time for tax cuts," interpreted House Bill 3183 as a giveaway to Oregon's largest businesses - without mentioning that these businesses employ thousands of Oregonians. It mentioned Nike, Intel and others while ignoring Lane County's own Molecular Probes.

Clearly the bill would provide incentives for Oregon-based businesses to remain in Oregon, unlike Boise-Cascade, Willamette Industries, US Bank and a litany of others that chose to relocate in other states. It would reward Oregon companies that invest in land, people and operations inside the state.

The current tax structure favors companies that ship products into Oregon while penalizing companies as they grow inside the state. HB 3183 would take away penalties paid by Oregon companies when they increase the size of their payroll or their physical plant.

In-state companies currently pay income-based taxes on a three-point formula: 80 percent sales, 10 percent property and 10 percent payroll. HB 3183 would change the formula in 2005 to 90 percent sales, 5 percent property and 5 percent payroll - and in 2007, the formula would change to 100 percent sales.

Oregon companies would then be on a level playing field with out-of-state companies. These income-based taxes are paid on top of taxes companies continue to pay, specifically for property and payroll.

Let's discuss some specific points made in the editorial:

"House Bill 3183 would provide at least $71 million in tax cuts." HB 3183 would provide incentives to a broad range of Oregon-based companies that export their products into U.S. and global markets. Companies that would benefit include Molecular Probes, Schnitzer Steel, Les Schwab, Monaco Coach, Louisiana-Pacific and Bear Creek Corporation. All are local companies, employing Oregonians and competing to grow their business in the global marketplace.

There is zero fiscal impact for the 2003-05 biennium. The phased-in effect would begin in the 2005-07 biennium, and could be reversed if economic recovery has not been realized. This bill would raise the taxes of companies that sell into our state but do not have Oregon property or hire Oregonians. The message is a signal to exporting companies wanting to headquarter in Oregon that we are willing to compete with the 19 other states that either have adopted or are considering this taxing structure.

HB 3183's incentives would be just a fraction of the $71 million mentioned in the editorial. And the incentives would result in more Oregonians with jobs.

"Supporters of the bill include (Republican) Rep. Pat Farr." HB 3183 has bipartisan support, including from eight leading Democratic House members.

"Some legislators are willing to put up with even higher reductions to ... services... ." It's clearly too early to tell. We are at the beginning of the budget and revenue process. And if, as suggested, some legislators are willing to cripple critical services there are many, including myself, who are not. Please check out HB 3636 regarding education funding.

"Republicans in Congress have agreed to pass $350 billion in additional tax cuts... . Such sorry leadership has trickled down to Oregon." Not so. I supported HB 2168, which would disconnect Oregon from the federal income tax calculation system and, when signed by the governor, will prevent corresponding cuts in Oregon.

"Farr and his fellow Republicans should take a look at (scaling) back some of the 350 tax deductions, exemptions, credits... ." My Revenue Committee - Republicans and Democrats alike - will continue to do just that. Of course, it would be neither prudent nor advisable to scale back all $8 billion in expenditures. Many make good sense economically, socially or both.

Lane County has suffered devastating job losses in the past two years. While levying more taxes may be something we must look at to get through this abnormally deep revenue deficit, the only way to fix our failed economy is to put Oregonians back to work. HB 3183 would provide a reason for Oregon-based companies to remain so and to bring new companies into the state to provide new jobs.

Following the decimation of the timber industry, the diversification into high-tech proved to be merely a shift to a different dependency. The high-octane growth of the 1990s gave way to our current, deep recession.

We must find ways to spread employment opportunities to a broader base of industry types. What better solution than to provide incentives for companies that choose to operate in Oregon, hire Oregonians and export their products abroad?

Pat Farr, R-Eugene, is assistant majority leader in the Oregon House of Representatives.