BY KEVIN MANAHAN
Tucked away among the restaurants and shops in Portland’s Old Town is NedSpace, a co-working office space for startups that combines old red brick architecture with a contemporary Ikea feel. A small crowd was gathered there last night for what looked like an after-work party, but the ambience was in contrast to the serious reason for the meeting. Most of the people were members of the startup community and were there to hear arguments against the controversial business taxes recently passed by the Legislature.
The meeting was organized by members of Oregonians Against Job-Killing Taxes, a coalition of businesses and individuals that collected double the amount of signatures required to get the measures onto January’s ballot — the first time Oregon will vote on a statewide referendum since 2004. Two tax measures are at issue: One raises the minimum corporate tax and one raises personal income tax on the highest-earning individuals.
Bob Wiggins, managing partner of Mount Hood Equity Partners, named several reasons why the issue should matter to startups. In addition to the implications of the taxes themselves — raising the personal income tax alone would make Oregon’s the highest in the country — Wiggins mentioned Oregon’s lack of capital-gain deduction in its income tax and the tax-free appeal of nearby Vancouver, Wash., as added factors that will drive business out of Oregon if the measures are not defeated. “This is as bad as it could possibly get for the startup community,” Wiggins said. “All [these factors] are designed, it seems, to shoot us in the foot.”
While the effect of the taxes continues to be debated, the message at this particular meeting was clear: Increasing taxes is not the answer. “There is never going to be enough money for the state for what they want to do,” said Tim Boyle, Columbia Sportswear CEO. Boyle and the other speakers, which included the heads of Routeware and the Oregon Home Builders Association, called for alternative ways for the Legislature to fill the budget shortfall instead of increasing taxes (the two business taxes would bring in $733 million). “What I’d rather see the Legislature do is take a serious look at the overall economic and tax structure in the state, rather than doing Band-Aid approaches that seem to be in the path of least resistance,” said Learning.com CEO Bill Kelly.
Before the meeting I talked with Perry Gruber, an Intel veteran who uses NedSpace to nurture his bottled-water startup, NedWater. Gruber was there to learn more about the tax issues; he only had a vague idea about what they would mean, but had heard the taxes would harm startup investment. “We haven’t had a lot of luck in having venture investment in this state, especially in Portland,” Gruber said. “One of the things that my partners and I are trying to do is create startups that attract more investment here. This tax kind of runs counter to our efforts.”