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Tax breaks for new jobs

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Ben Jacklet
Wednesday, May 27, 2009

I've gotten some nice feedback on my first draft of a top 10 list of Oregon businesses that are hiring and expanding. The biggest response: Hey, put us on the list. We're doing just fine.

That was the message from Portland Energy Conservation, which has 23 job openings in the red-hot field of green building and energy efficiency. This company even has a bounty hunter program that pays $1,000 for successful referrals for hard-to-fill positions such as refrigeration engineers. Who needs rock stars when you have refrigeration engineers?

I also heard from a marketing company out of Bend called G5 Search Marketing that has tripled its employee count since the end of 2007, from 15 to 45. My contact there, Devin Davis, made a strong argument that there is light at the end of the tunnel in Bend, despite its embarrassing position near the top of the list for the nation's highest unemployment rates in metro areas. He reeled off a quick list of companies that are poised to take off there, including GL Suite, Rocketbux and PV Powered.

Those are exactly the types of stories I was hoping to hear. But before I hear from every marketing manager in the state about how great his or her company is doing, I should mention the claw-back provisions. Businesses that promise jobs to get tax benefits and then don't deliver will be called to the carpet. Which brings me to a new idea, from Senate President Peter Courtney, to grant $2,000 tax credits to companies that can PROVE they create jobs in 2009. If his idea becomes law, the state will fund the program with $10 million.

Courtney's proposal strikes me as a refreshingly non-convoluted way to encourage the private sector. To his credit, he has taken the recession seriously from Day One and never fell for that nonsense about Oregon being somehow immune. He told me last week that he couldn't think of a more constructive way to reverse the state's slide than to give credit where it is due and reward job creation. His idea has drawn criticism, but after five consecutive quarters of job losses in Oregon, it makes sense to me.

What do you think?

 

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Eric Williams
0 #1 Peter Courtney's Idea is great - here's a few suggested modificationsEric Williams 2009-05-28 14:01:32
I like Courtney's general idea. I wish I could tweak the proposal a bit, though. Some of my concerns are that businesses will get the tax credit without truly creating a job, but rather replacing people. So, I would like to see a requirement for measurement of payroll at the beginning of the year and the end of the year to verify that there have been net new jobs/payroll added rather than replacement of people or converting full-time jobs to more part-time jobs (thus creating new jobs on paper, but not really increasing payroll). I also wish that the tax credit was a stronger incentive for creating higher wage jobs. For example, maybe offer a credit that is calculated by multiplying the gross wage of the job by 10% for those jobs created with annual wages of $20k-$30k, 15% of gross wages for jobs that pay $30k-$40k, and 20% of gross wages for jobs that pay $40k but with a maximum of $20k per employee. This would mean that if someone created a job paying $25k they would get a tax credit of $2,500 but someone who creates a job that pays $60k would get a tax credit of $12,000. Don't we want to encourage the development of higher wage jobs, rather than subsistence wage jobs?
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