From the Arkansas Democrat Newspaper
“Take the Oregon Trail

THE GOOD news from Oregon is that its voters have just done their best to boost the economic fortunes of all the rest of us out here in the good old, investment-hungry U. S. of A. We’d like to think the good voters of that state were moved by nothing more than generosity of spirit when they adjusted their tax rates in order to make their state a happy hunting ground for other states’ economic development people. But we suspect it was political correctness in action, or maybe just plain economic illiteracy. It’s not always easy to tell the difference between the two.

For whatever reason, Oregon has just raised its taxes, and how, on that state’s employers, investors and rich folks in general. You know, the people who employ the rest of us, who invest in things like power plants and wind turbines and widget factories. They’re about to get hit hard by Oregon’s new tax structure.

That state’s top income rate has just jumped from 9 to 11 percent, and its corporate rate from 6.6 to 7.9 percent. Taxes and fees on many small businesses have been doubled. That’ll teach all those plutocrats, not to mention mom-andpops who run family businesses, to go on hiring and investing. What a brilliant move-at least if the goal is to drive industries out of Oregon.

At least one class in that state will benefit by this new and higher tax structure for the entrepreneurial: all the tax collectors who work for state government. Not to mention that state’s tax accountants, who’ll be needed to help businesses keep up with all the changes and new paperwork.
The number and salaries of government bureaucrats in Oregon should multiply as tax revenues increase-for a while. That is, until business and industry begin to relocate to more hospitable locales. This vote to raise taxes may not help Oregon, but it could do a lot for other states. Especially those who already have started courting Oregon’s plants and business headquarters.

To quote Mayor Daley the Second of Chicago-the mayor of Chicago is always named Daley, it’s a standing rule-Oregon’s decision to raise taxes across the board “will help our economic development immediately. You’d better believe it. We’ll be out in Oregon enticing corporations to relocate to Chicago.” That toddlin’ town doesn’t miss a chance. The folks at this state’s Economic Development Commission (Maria Luisa M. Haley, executive director) would do well to follow Hizzoner’s lead while the industry-hunting is good. And it will be so long as Oregon keeps raising its taxes from high to onerous.

THE REFRESHING thing about the Daley dynasty is that its anointed chief has never been shy about what the Windy City (or even America) is about: money. With a capital dollar sign. We wouldn’t despise it, however badly the monied may behave from time to time. For money is what supports those striving families all over Chicagoland, whether in the toney suburbs or on the struggling South Side. It’s also what pays for the symphonies and art museums and universities that dot the city, along with a skyline that can compete with any in the world. Michigan Avenue is about to get grander, the Gold Coast golder.

Tourists, please note: Next time you get to visit Chicago, take the riverboat tour of its landmarks. You’ll see the whole history of American architecture unfold before you over the course of a few hours; it beats the heck out of any college course. To think, all that was paid for by sweat and enterprise. It is the product of people who came from all over to the City of Big Shoulders-farm boys from the Great Plains, black migrants from the old Jim Crow South, the huddled masses from Europe’s teeming ghettoes . . . They all came in pursuit of the American Dream, and many achieved it.

Tax such people to death (and afterward, too) and they’ll start looking around for greener pastures. Burden the kind of people who make Oregon prosperous, or at least used to, and they may begin to look around for other locales. Like beautiful, inviting, business-friendly Arkansas, let’s hope.

Daley the Younger understands all that. (Who says the head of a Democratic machine can’t be as savvy about business as any Republican?) Hizzoner might make a good editorial writer, too. Because he pretty much summed up what has happened out in Oregon and its significance for the more enterprising out in the rest of the country, aka Back East. To quote this generation’s Richard Daley, “What happened in Oregon is not good news for Oregon.”

The mayor of Chicago could scarcely contain his amazement at how those people out West think, if you could call it thinking: “They believe that anybody who makes $125,000 or more [a year] or businesses or anyone who makes $250,000-they’re gonna start taxing them. They call them ‘rich people.’ ” Mayor Daley has a different philosophy, one closer to that of the classical economists-even if his language may not be as grand. As he sums up his approach to the economic realities: “You finish high school. You work hard, go to college and you hope to succeed in life. I never knew it was a class war-that those who succeed in life have to bear all the burden. I never realized that. It will be a whole change in America that those who succeed and work hard, we’re gonna tax ’em more than anyone else.” SURE, an intellectual could pick apart the mayor’s brief statement with its less than fine points-not to mention his grammar and syntax. After all, some of us conservatives do favor progressive tax rates on income, just not the exorbitant kind that dries up capital and jobs with it. The mayor’s got a point. However he may offend the intelligentsia in his town. How many payrolls do you think your average intellectual has met? How many jobs has he created? How much has he-or she-given to philanthropic causes and cultural treasures? Compared to, say, your average multi-millionaire.

There may be some glitches in the mayor’s language, and one could even accuse Hizzoner of over-simplifying the message of the great economists, but he’s got the spirit of the thing right. We’d take his approach to economic questions any day or night over those who under-simplify economics, and make it all a terribly complicated question of how much government can do for us. Politicians who go that route may wind up showing how much government can do to us. And pile up record deficits to be paid by successive generations. Generational theft, Sarah Palin calls it.

Speaking of under-simplifying economics, we can’t think of a better example than this administration’s rabbitout-of-the-hat plan that will get some 30 million more Americans health insurance, lower all our medical costs, and-hesto presto!-reduce federal deficits, too!
All that Congress need do is save money on Medicare for 10 years while raising taxes only for six, give states like Nebraska and Louisiana special consideration in exchange for their senators’ support for Obamacare, and doctors and hospitals will rush to cut their reimbursements from the insurance companies. It all works out-on paper. Barack Obama can explain it, at least to himself.

After the current mayor of Chicago, Ill., has sent his crack team of industryhunters out to Portland, Ore., followed if not preceded by a team from Arkansas with the same object in mind, it’d be nice if Hizzoner had time to sit down and explain all this, namely the economics of the real world, to the current president of the United States. Barack Obama, who comes from Chicago himself, might just catch on.

This article was published on page 10 of the Tuesday, February 16, 2010 edition in the Editorial section.

IRS Begins Employment Tax/Fringe Benefit Plan Audit Focus

Each year, March signals the start of Spring and Daylight Savings Time. This year, however, March brings the start of yet another important landmark: the Internal Revenue Service’s long-foreshadowed employment tax audit program, known officially as the Payroll Tax Audit Initiative. The Initiative will randomly select employers for audits of their compliance with employment tax laws, with a focus on:

• Fringe Benefits
• Employee Reimbursements
• Executive Compensation Reasonableness
• Classification of workers as Employees or Independent

Contractors/Temporary Employees

Obviously, employers who are randomly selected for the audit will need to be prepared to address their employment tax practices. However, the Initiative is a worthwhile opportunity for employers who are not selected for an audit to review their payroll procedures in all of the above areas. Employers should pay special note to provisions in employee handbooks and other employer literature regarding these four targeted areas.

Fringe Benefits

Employers should evaluate the fringe benefits they offer and determine whether taxes are properly withheld and income tax is imputed to employees as required. Employers commonly (and mistakenly) believe that fringe benefits are non-taxable, or fail to withhold taxes on fringe benefits. Fringe benefits include:

• Employer paid automobiles
• Awards such as gift cards
• Education Assistance Plans
• Dependent care programs
• Discounted services
• Meal and Travel reimbursements
• Corporate credit card expenses
• Leave bank programs
• Fitness programs and classes
• Personal computers and cell phones used for personal time at home
• Vacation and sick leave cash-out programs

Employee Reimbursements

As part of the Initiative, the IRS will focus on employee-reimbursement policies, a frequent area of confusion for employers. What are the tax consequences when employees pay business expenses out of their own pocket and receive reimbursement from the employer? Many employers assume that in this scenario, the employer simply takes a tax deduction for the expense and the employee does not report the reimbursement as income. In the absence of a written reimbursement policy, this practice is incorrect. Unless a written reimbursement policy is in place, the employer should deduct the reimbursement as compensation and withhold employment taxes reimbursement amount. On the other side of the ledger, the employee should report the reimbursement as income, and in most instances will not be allowed to deduct the business expense. If there is a written policy in place, the expenses are deductible as business expenses, not subject to FICA/FUTA and are not recognized as income by the employee.

Executive Compensation

This issue will focus on both the C Corporation distributing all profits to its owners in an attempt to have one layer of income tax and S Corporations/LLCs which pay minimum salaries to avoid taxes. Employers should review their policies if they meet either of the above fact situations.

Employee Classification

This has long been a focus of the IRS and the Department of Labor. The IRS prefers that workers be employees, rather than independent contractors, because the employer has the obligation of paying social security and unemployment taxes for employees, but not for independent contractors. Employers should evaluate their independent contractor relationships to ensure that these individuals are not “disguised employees.”

Steps to Take

Whether you are selected for audit, or are simply planning ahead, evaluation today can save significant dollars in the future. Most of the problems an IRS audit would uncover can be solved in advance by having the proper procedures in place. The existence of proper policies relating to employee reimbursements, executive compensation, fringe benefit programs and classification of workers can save the time and expense of IRS tax exposure.

To learn more about Barran Liebman Events & News, please visit  www.barran.com.

SALEM — In life, there are those who take the road less followed. Oregon State Treasurer Ben Westlund’s was miles past where the pavement ends. His path took him from Apple Valley, Calif; to the shores of Lake Oswego; to the painted hills of Eastern Oregon; to rural Deschutes County; and then to the statehouse, where he served as a legislator and as Treasurer. In Central Oregon and then the Capitol, where Westlund spent much of the past 13 years since being first elected in 1996, he was known for his easygoing wit and his signature sign off: “Down the trail.”

Westlund’s journey ended too soon. He died early Sunday in Bend, when he lost his battle to cancer. He was 60.
The son of Long Beach oilman Bernard “Bud”, and Dorothy Reynolds Westlund, was born Sept. 3, 1949, Spent first 16 years in Apple Valley, California where his father had a successful real estate development. Then his family returned to the Northwest with his two brothers. He graduated from Whitman College in Walla Walla, Wash., where he earned a degree in education and history.
He helped start a successful mining venture in Christmas Valley, and then a marketing company in Portland. In the 1980s he started ranching in Eastern Oregon and named his operation High Country Herefords, and a cattle genetics operation in Oklahoma called Taurus. His best-known and most economically successful prize-winning Hereford bull was named Reggie.

Westlund married his wife, Libby Bishop, a high school classmate and friend, in1987. After selling his registered Hereford herd in 1990 they settled on the Deschutes River in Tumalo, outside of Bend. They have two children; BJ, 21, and Taylor, 17. Ben dutifully called home every night at 8 p.m. during his years at the Capitol to say good night to his family.

A lifetime fan of baseball, specifically the Los Angeles Dodgers, Westlund also was part-owner in the 1990s of a minor league baseball team, the Bend Bandits. While it was fun to own a team, Ben recounted that the best part of the experience was traveling the state with his kids, watching their team play.

A friend convinced him to run for the legislature in 1996 and Westlund was elected to the Oregon Legislature House of Representatives. In 2003, he was appointed to the Senate and successfully won the seat in 2004. He quickly earned a reputation as a problem solver and as an advocate for Oregon families.

In his 12 years in the state Legislature, he was a co-chairman of the budget-drafting Joint Ways and Means Committee and championed legislation that created the State’s Rainy Day Fund, Public Safety Memorial Fund and the Oregon Cultural Trust. He was the chief legislative advocate for creating the Cascades Campus of Oregon State University in Central Oregon.

He survived an initial bout with lung cancer in 2005. A political moderate who started his career as a Republican, Westlund bucked his party and was the cosponsor of legislation to give marriage-like rights to same-sex couples. He staged a brief campaign for governor as an independent in 2006.

He fought for consumer protection and was the co-author of Oregon’s health system reforms in 2007, and was elected as Oregon’s 27th State Treasurer in 2008. He is the only state treasurer to be elected from east of the Cascades in recent memory.
As Treasurer, he gained national attention for his initiative to expand investment transparency and led a series of reforms to increase accountability and options in the Oregon 529 College Savings Plan. He was instrumental in securing a $20 million settlement in 2009 for families who are saving for their children’s futures.

He worked to the end and was he was a hands-on, creative and collaborative leader who sought to bring out the best in his staff. In the final quarter of 2009, the returns earned by the State Treasury investment division were in the top 1 percent of large public funds.
In his speeches, he frequently joked that while folks can learn lifelong lessons in kindergarten, you can learn a lot about being Treasurer from ranching. For instance, watch out for predators, sunshine is the best disinfectant, and watch where you step.

Westlund’s legacy will live on in Oregon, in the form of the cultural trust and public safety fund, which provides money to families of officers killed or injured in the line of duty. His legacy also will live on in the memories of friends and Oregonians whose lives he touched, and those who spoke with him, or were fortunate enough to meet him in his travels down almost every road – paved or not — across the state he loved.

Down the trail, Ben.
Down the trail.

1. Employment and General Business 2010 Session Report
2. Fiscal Policy & Tax Issues
3. Health Care 2010 Session Report
4. Retail 2010 Session Report
5. Employment and Fiscal Policy
6. Environment & Energy 2010 Session Report

1. Employment and General Business 2010 Session Report
Article by: J.L. Wilson - February 26, 2010

SB 1045. Senator Diane Rosenbaum (D-Portland). Employer Credit Checks.

As introduced, the bill would effectively prohibit employers from running credit checks on employees for employment related purposes and create new Unlawful Employment Actions against employers who took adverse employment actions based on credit reports.

Actions: AOI strongly opposed bill. AOI worked this issue in order to gain language that allows employers to continue to use credit checks, so long as those checks are substantially job-related.

Status: Passed Senate, Passed House. Awaiting Governor’s signature.

HB 3653. House Business Committee. “Employer Gag Bill” re-write.

This bill is the third version of the “employer gag bill” to be introduced in less than one year at the request of the AFL-CIO. HB 3653 expands the political content that employers are prohibited from discussing with employees. But the new bill will specify that employers are allowed to hold mandatory meetings on such things as workplace safety and other topics directly related to the job. AOI’s legal counsel has assured AOI that the new bill will not sidetrack our pending federal lawsuit challenging the validity of SB 519.

Actions: AOI strongly opposed the bill in the House, going so far as to introduce a “minority report” on the bill that forced the House to vote on a full repeal of the original SB 519.

Status: HB 3653 passed the House 34-26, but the hard fought battle in the House caused the Senate to balk on the bill. The bill died in the Senate.

HB 3655. House Business Committee. Unemployment Benefit Extension.

As introduced, HB 3655 is a $19 million Oregon Emergency Benefits extension that would fund nearly 19,000 unemployed workers for an additional 4-6 weeks of benefits. This is money previously allocated for emergency benefits last year that has not been utilized. The $19 million will not impact employers’ unemployment tax rates. AOI supported the bill.

Status: Passed Legislature. Signed by Governor.

HB 3706. Representative Nick Kahl (D-Portland). Includes Banks and Lenders under Oregon’s Unlawful Trade Practices Act.

As introduced, the bill puts Oregon’s community banks and financial institutions under Oregon Unlawful Trade Practices Act. HB 3706 allows new private rights of action against these businesses.

Actions: AOI opposed the bill, arguing that subjecting community banks and lender to new lawsuits will ultimately diminish the availability of credit and hurt community businesses.

Status: Narrowly passed the House and Senate. Awaiting Governor’s signature.

2. Fiscal Policy & Tax Issues
Article by: J.L. Wilson - February 26, 2010

Kicker Reform. Governor Ted Kulongoski.

Although no specific proposal emerged, Governor Kulongoski’s initial priority heading into the 2010 special session was reforming the state’s kicker law to fill the state’s “rainy day fund.”

Actions: AOI and several leading business groups united behind one simple message: Oregon’s business community is not interested in kicker reform unless it’s in the context of a broad fiscal reform package.

Status: Governor Kulongoski’s proposal to reform the state’s kicker law was rejected by legislative leaders and was never introduced as legislation.

Oregon Stability Package. Senator Frank Morse (R-Albany), Senator Ginny Burdick (D-Portland).

Senators Frank Morse and Ginny Burdick took the first steps to introduce a comprehensive fiscal reform package aimed at cutting capital gains taxes, limiting state spending, and reforming the state’s kicker law.

Actions: AOI and several leading business groups signed a letter thanking Senators Morse and Burdick for their good faith effort. AOI pledged to keep the dialogue going over the interim.

Status: The Oregon Stability Package did not gain traction, but it did provide a platform for further work on the issue.

3. Health Care 2010 Session Report
Article by: Betsy Earls - February 26, 2010

SB 1003. Association Health Plans

The passage of HB 3321 (2007) allowed group health insurers more flexibility in selling association and trust health benefit plans to small employer groups. The bill established protections to keep groups insured under these plans from losing coverage due to high claims, and made out-of-state association and trust health plans subject to the same requirements as Oregon-based associations. One of the protections established by HB 3321 was the requirement that associations maintain a retention rate of 95% in order to maintain their status.

Some associations have been struggling to maintain this retention rate and some have failed altogether. SB 1003 allows associations to seek a waiver of the retention rate. DCBS would establish standards to review the requests.

Oregon Insurance Division Director Teresa Miller has stated that she intends to use the following criteria for granting waivers from the 95% requirement:
Loss ratios of the small employer groups remaining in the association as well as the loss ratios of the small employer groups that left the association;
Reasons small employers left the association;

Rate increases facing small employers that left the association compared to rate increases facing small employers remaining in the association; and
Any other reasons the association health plan fails to meet the retention rate.

Action: Passed House and Senate

HB 3611. Deductibility of Individual Health Insurance Premiums.

HB 3166 started the session as an attempt to make premiums for individual health plans deductible. However, when the bill received a fiscal impact statement of $160m/year, the House Health Care Committee began discussing ways to make the plan revenue neutral. The first idea they had was to cap the deductibility of premiums for group plans. The proposal received a fair amount of consideration, and eventually was sent to the Revenue Committee for analysis.

Action: Moved to House Revenue for further review

HB 3659. Temporary High Risk Pool for Health Insurance

The Oregon Medical Insurance Pool (OMIP) is the state’s high-risk health insurance pool. The current budget for OMIP is $407.1 million. The program insures about 18,000 Oregonians who fall into one or more of the three following eligibility categories:
Those who are unable to obtain commercial medical insurance because of pre-existing health conditions;
Those who are eligible for portability coverage but have no access to commercial portability plans; and
Those who are eligible for an 80% Federal Health Coverage Tax Credit because they lost their jobs due to foreign trade or their company declared bankruptcy and they fall under the Pension Benefit Guarantee Corporation.
OMIP enrollees cover about 50% of the program’s medical and drug claim costs through premium payments, with the remaining cost covered by an assessment on commercial insurers doing business in Oregon.

National health reform legislation proposals have included an expansion of state high-risk pools as an interim way to make health insurance available to more uninsured people. Both the House and Senate versions of health care reform packages contain provisions that require the Secretary of the U.S. Department of Health and Human Services to establish a Temporary National High Risk Pool Program. HB 3659-A creates a fund that would contain any Federal Funds received from the federal government for a high-risk pool program. Monies in the fund are continuously appropriated to the OMIP Board. Expenditures from this fund could be limited by the Legislative Assemblyalthough expenditures from the OMIP are currently non-limited.

Action: Passed House and Senate

HB 3664. Health Coverage for Foster Children

Creates a new eligibility category in the Oregon Health Plan for individuals from ages 18 to 21 who, immediately prior to their 18th birthdays, were in a foster family home or licensed child-caring agency or institution. Currently, children (under 18) in foster care are eligible for Medicaid-funded health care. HB 3664 would extent that eligibility through a child’s 21st year.

The 1% commercial premium tax passed in 2009 funds an expansion of public health coverage to children. Through this program, children in households with incomes up to the 300% of the federal poverty level can receive Medicaid or subsidized commercial health insurance depending on their specific household income. The Department of Human Services testified that it will have adequate premium tax revenue to fund the original Health Care for All Oregon Children program as well as this proposed expansion. For the rest of the 2009-11 biennium, the expansion is expected to cost $0.5 million in premium tax revenue, (to $1.3 million total funds). In 2011-2013, it will cost $1.8 million in premium tax revenue, ($4.6 million total funds).

Action: Passed House and Senate

HB 3665. Dental Services Contracts

Most companies that sell dental benefit plans require, as part of their contract with dentists, that these dentists give a discount to plan enrollees for services not covered by the plan. House Bill 3665A prohibits dental service contracts from requiring such a discount on charges for noncovered services.

Action: Passed House and Senate

4. Retail 2010 Session Report
Article by: Betsy Earls - February 26, 2010

SB 1032, HB 3703 - Ban on Sale of Products Containing Bisphenol-A (BPA)

SB 1032 would have prohibited retailers from offering for sale any product intended for use in eating and drinking that contains BPA, if that product is intended primarily for use by a child under the age of three. It would also have prohibited the sale of any food primarily intended for consumption by children under three, if food packaging contains BPA. The bill died on the Senate floor last week, but was immediately resurrected as HB 3703.

HB 3703 was drafted to prohibit the sale of re-useable drinking containers for children under the age of three (bottles and sippy cups), and included a statement that use of food-container lining with BPA would not be addressed until the FDA completed its current review of the chemical. This statement was proposed by legislators with food-processing industries in their districts, but in the end, it didn’t make the bill any more attractive. It remains in House Rules.

SB 1001A - Consumer Contracts

The bill would have imposed a restriction on consumer contracts with automatic renewal provisions that are triggered at the end of the contractual period. Under most automatic renewal provisions, a consumer does not need to expressly consent to an additional contract period after the initial contract term has ended, and may not receive notice that the automatic renewal provision has been triggered. Under SB 1001A, automatic renewal provisions in consumer contracts could not be applied without clear and conspicuous notice of the provision, and applicable cancellation procedure, to the consumer.

SB 1001A also addressed early termination fees (ETF), and would have made the charge of an ETF an unlawful trade practice unless notice is given to the consumer and the consumer provides express consent. Although the bill was moved from Senate Consumer Protection to Senate Rules with a do-pass recommendation, it has not resurfaced.

5. Employment and Fiscal Policy
Article by: J.L. Wilson - February 1, 2010
February 2010 Talking Points on Education and Fiscal Policy

Senator Diane Rosenbaum (D-Portland) is introducing legislation – SB 1045 – that would prohibit employers from using credit reports to make employment decisions.  Over half of Oregon employers use these types of reports in hiring key personnel, usually in positions of “trust” (handling company assets, customer assets, or sensitive information).  The AOI Board of Directors voted to oppose this legislation as introduced, but AOI will work with the sponsor and others to explore opportunities to make the legislation workable for employers.

The legislature is planning to move a $19 million emergency unemployment benefit extension that would fund most claimants for an additional 4-6 weeks of benefits.  This is money previously allocated for emergency benefits last year that has not been utilized.  The $19 million will not impact employers’ unemployment tax rates.

The House Business Committee will introduce yet another re-write of the “employer gag bill,” again at the behest of the AFL-CIO.  This is the second re-write in addition to the passage of the original SB 519 last year.  The new bill will expand the political content that employers are prohibited from discussing with employees to include ballot measures.  However, the new bill will specify that employers are allowed to hold mandatory meetings on such things as workplace safety and other topics directly related to the job.
AOI’s legal counsel has assured AOI that the new bill will not sidetrack our pending federal lawsuit challenging the validity of SB 519.

AOI’s lawsuit against SB 519 (2009) is progressing toward a hearing for Summary Judgment in early April in federal court in Portland.  AOI, in conjunction with the US Chamber of Commerce, is challenging SB 519 as an illegal intrusion on federal labor law as well as an unconstitutional abridgement of an employer’s First Amendment free speech rights.

Representative Nick Kahl (D-Troutdale) will introduce legislation to include banks and insurance companies under Oregon’s Unlawful Trade Practices Act.  The new legislation – HB 3615 – will be opposed by a wide array of industry groups.

6. Environment & Energy 2010 Session Report
Article by: J.L. Wilson - February 26, 2010

HB 3680. House Revenue Committee. Business Energy Tax Credits (BETC).

Legislators, responding to the runaway costs of Oregon’s Business Energy Tax Credit program, introduced HB 3680 to put some limits on the costs of this vital tax incentive program. HB 3680 changes the 5-year credit to a 6-year credit on projects exceeding $10 million by pushing back the credit until one full year after certification. Limits credit costs to individual wind projects down to $1.5 million by 2012. Places $300 million pre-certification limit for renewable projects and $200 million for manufacturing projects. HB 3680 will save the state $55 million in the current biennium.

Status: HB 3680 passed both House and Senate. On Governor’s desk.

Oregon’s Payroll Employment

Information: -5.4%
Other services: -3.5%
Professional business services: -1.6%
Leisure  hospitality: -1.5%
Manufacturing: -0.9%
Retail trade: -0.9%
Educational & Health services: -1.2%

Oregon Unemployment Rate Peak Shaved to 11.6 Percent in 2009
Revised data for 2009 and prior show that Oregon’s unemployment rate reached a recent high of 11.6 percent in May and June 2009, lower than the originally published high of 12.2 percent in May 2009. Due to the sample size of the household survey that is one of the primary inputs to Oregon’s unemployment rate calculation, the difference between these two levels is not statistically significant, but the change does mean that the highest unemployment rate of this current recession (to date) is now lower than the highest rate of the recession of the early 1980s (12.1 percent).

Overall trends in Oregon’s unemployment rate were not changed by these revisions. The seasonally adjusted unemployment rate was very low, between 5.0 percent and 5.4 percent, during the 27-month period February 2006 through April 2008. Then the rate rose quickly to the 6 percent range by the summer of 2008. After that the rate rocketed upward to the 11-percent range within the next seven months. This rapid rise in Oregon’s unemployment rate was unprecedented over a period stretching back more than 30 years.

Payroll Employment Drops Even Further
Revised payroll employment estimates for 2009 show that Oregon’s job losses were even more substantial than those originally published. For example, initial estimates suggested Oregon lost more than 120,000 jobs from the February 2008 pre-recession employment peak to the December 2009 level; that figure is now reported at 148,600.

On an annual average basis, Oregon’s payroll employment fell by 12,900 jobs or 0.7 percent in 2008 and declined by 106,400 jobs or 6.2 percent in 2009.  Of Oregon’s major industry categories, construction experienced the largest revision to its numbers. The annual average figure for 2009 was originally reported as 79,000, while the new figure is 73,800. This is a downward revision of 5,200 jobs or -6.6 percent. By comparison, Oregon’s total nonfarm payroll employment for the 2009 annual average was revised downward by 1.3 percent. Of the remaining major industries, all but two were revised downward. Many of the large industries saw their 2009 annual average revised downward by close to 2,000 jobs. These industries, and their corresponding percent revision for the 2009 annual average, were as follows: manufacturing (-0.9%), retail trade (-0.9%), information (-5.4%), professional and business services (-1.6%), educational and health services (-1.2%), leisure and hospitality (-1.5%), and other services (-3.5%).

Benchmarking Process
The newly revised payroll employment numbers are the result of the annual benchmarking process. This revision process is conducted by the Oregon Employment Department staff in cooperation with the U.S. Department of Labor, Bureau of Labor Statistics. For the monthly data through September 2009, original survey-based estimates were replaced with universe employment counts from the Unemployment Insurance tax system. Numbers from September through December 2009 were then re-estimated using sample employment data from a survey of businesses.

The magnitude of the revision for this benchmark was very large by historical standards. The revision to the 2009 annual average for total payroll employment was -20,900 or  1.3 percent. During the prior 17 years, comparable revisions ranged from -0.9 percent in the 1999 revision to +1.2 percent in the 1993 revision, with nearly half of the last 17 years coming in within plus or minus 0.2 percent.

Oregon’s Employment Situation: January 2010
Oregon’s seasonally adjusted unemployment rate was essentially unchanged at 10.7 percent in January from the revised December figure of 10.6 percent. The rate has been close to 10.7 percent between October 2009 and January 2010. Oregon’s unemployment rate was 9.9 percent in January 2009.

Between August 2009 and January 2010 the U.S. seasonally adjusted unemployment rate has been between 9.7 percent and 10.1 percent.

Revised figures for the last three months of 2009 show each month posted a drop of between 1,000 and 1,800 jobs. January’s employment change was also close to a flat trend, but on the positive side, with a gain of 1,100. This was the first seasonally adjusted monthly job gain since February 2008, when 900 jobs were added.

Industry Payroll Employment (Establishment Survey Data)
In January, most of the major industries performed in line with their typical seasonal patterns. Two major industries posted substantial seasonally adjusted job gains: trade, transportation, and utilities (+1,300) and professional and business services (+1,400). Construction (-1,600 jobs) was the only major industry to post a substantial seasonally adjusted job loss.

Trade, transportation, and utilities cut only 10,900 jobs in January, when a loss of 12,200 was predicted due purely to seasonal factors. January normally sees large job reductions following the buildup of workers for the holiday season. This year was no exception as retail trade shed 9,000 workers and couriers and messengers cut back by 1,200. Within retail, post-holiday reductions were largest at clothing stores (-1,500 jobs), general merchandise stores (-2,500), and nonstore retailers (-2,500).

Professional and business services employment has shown no clear upward or downward trend over the past several months. In January, employment dropped only 3,500, when a loss of 4,900 is the normal seasonal pattern. Employment services cut 1,300 jobs, while business support services shed 1,000.

Construction continued to trend downward rapidly, with a loss of 4,400 jobs during a month when the expected drop due to seasonal factors was 2,800. All published components of construction were negative in January, with specialty trade contractors cutting back the most with a decline of 2,800 jobs.

Unemployment (Household Survey Data)
In January, Oregon’s seasonally adjusted unemployment rate was 10.7 percent.
In January, 227,579 Oregonians were unemployed. In January 2009, 210,754 Oregonians were unemployed.

As generations continue to mix in the workplace, many older workers are reporting to younger bosses. A new CareerBuilder survey finds that 43 percent of workers ages 35 and older said they currently work for someone younger than them. Breaking down age groups, more than half (53 percent) of workers ages 45 and up said they have a boss younger than them, followed by 69 percent of workers ages 55 and up. This survey was conducted from November 5 and November 23, 2009, among more than 5,200 workers.

Occasionally, the younger boss, older worker situation can create challenges. Sixteen percent of workers ages 25-34 said they find it difficult to take direction from a boss younger than them, while 13 percent of workers ages 35-44 said the same. Only 7 percent of workers ages 45-54 and 5 percent of workers ages 55 and up indicated they had difficulty taking direction from a younger boss.

Workers reported that there are a variety of reasons why working for someone younger than them can be a challenge, including:

They act like they know more than me when they don’t

They act like they’re entitled and didn’t earn their position

They micromanage

They play favorites with younger workers

They don’t give me enough direction
“As companies emerge from this recession, it is important for employees to work together and move the business forward, regardless of their age,” said Rosemary Haefner, vice president of human resources at CareerBuilder. “With so many different age groups present, challenges can arise. Younger and older workers both need to recognize the value that each group brings to the table. By looking past their differences and focusing on their strengths, workers of any age can mutually benefit from those around them, creating a more cohesive workplace.”

PrimeCB.com, CareerBuilder’s job site for mature workers, offers the following tips for bridging generational differences at work:

Understand others’ point of view: Different generations tend to have differing opinions on a variety of topics, from management style to pop culture. Put yourself in others’ shoes to better understand where they’re coming from.

Adapt your communication: Younger workers tend to favor communicating frequently using technology, such as e-mail and instant messenger. Older workers may prefer more face-to-face contact. Both parties should take this and other communication differences into consideration when interacting.

Keep an open mind: Try not to make assumptions about those who are of a different age group than you. All workers have different skill sets and strengths, so see what you can learn from others rather than making judgments based on their age.

At 11 percent unemployment, Oregon is tied with Alabama for having the ninth highest unemployment in the U.S.  Some politicians and policy makers are cheering the fact that Oregon is not tied for first or second place, as it was a few months ago. Even so, Oregon has occupied a spot in the top ten highest unemployment states in 18 of the past 34 years.

Oregon’s chronic high employment has been a source of bafflement for many observers and economists.

Businesses note that Oregon has an anti-business attitude that treats business a problem to be dealt with rather than an endeavor to foster.  In contrast, others point to surveys that rank Oregon as having one the lowest business tax burdens in the country [1, 2] or being one of the most “business friendly” states in the country. In the face of these studies, Oregon’s persistent high employment rate suggests (1) Oregon is not employment friendly, and/or (2) the various tax burden and business friendly are fundamentally flawed and, therefore, meaningless.

Since so many Oregonian’s do not like to discuss the state’s business environment, observers have tried other explanations for Oregon’s moribund jobs environment, including:

Education.  If Oregon just spent more money on education, employment in the state would improve.

Climate. Analysts at the Oregon Employment Department have a theory that states with milder climates have higher unemployment rates and (believe it or not) Oregon is considered to have a relatively mild climate.

High minimum wage.  Although minimum wage workers (and potential works) make up a relatively small portion of the workforce, Oregon’s unemployment rate among those most likely to earn minimum wage is substantially higher than if Oregon’s minimum wage was the same as the Federal rate.
Ultimately, many observers, reporters, and politicians throw up their hands and blame manufacturing.  The story goes like this …

Oregon relies heavily on heavy manufacturing. Heavy manufacturing is highly cyclical: Employment soars during boom times plummets during down times.  Thus, during recessions Oregon’s employment suffers worse than the rest of the country.  The story falls apart for several reasons:

Oregon’s unemployment rate is high even during boom times.  If the manufacturing story were true, during economic booms Oregon’s unemployment rate should drop faster and/or be lower than the rest of the country’s.

Oregon does not rely that heavily on heavy manufacturing.  According to the Oregon Employment Department, throughout the U.S. heavy manufacturing accounts for approximately 6.1 percent of employment.  In Oregon, it accounts for 8.3 percent. It not clear that this is enough of a difference to explain the state’s persistently high unemployment.

Other states that rely more heavily on heavy manufacturing do not have persistently high unemployment.  According to the Oregon Employment Department, Wisconsin, Iowa, and New Hampshire have a greater share of their employment in heavy manufacturing, yet these state have much lower unemployment than Oregon.  In fact the Oregon Employment Department produced the following graph that concludes that “there seem to be other factors that have a stronger correlation to the unemployment rate than the concentration of durable goods employment.”

By Patrick Emerson

Oregon state Senate Bill 1045 prohibits most employers from using credit checks in their pre-employment screen of job seekers.  It has passed the house and senate and awaits the Governor’s signature.

It is not clear to me where the market failure is here.  It seems to me that proponents of the bill are suggesting two problems: the information is not meaningful (good people caught due to no fault of their own), or the information is wrong.  If the information is not meaningful or inaccurate then the market should take care of the problem by itself: employers will find that using credit reports does not yield good information and costs money and time and thus they should decide that it is not worth the effort.

So if the argument that the credit score has nothing to do with whether a person will be a good employee is true then the worth of credit scores to employers should quickly be revealed to be nil and they will stop on their own.  In which case there is no need for a legislative solution.

Now there is one way in which I can see a problem that may need a legislative solution: if the information is wrong but not randomly wrong, systematically wrong.  In other words if one group’s credit scores are systematically lower due to error. For instance if racial minorities are more likely to have mistakes on their credit reports which lowers their scores.  In this case using a credit score is equivalent to discrimination (albeit unwittingly).  If this is true, however, the problem is with the credit rating agencies themselves and has many more implications than just hiring.  The solution to this problem is regulating the agencies themselves. [Note: a quick search of the literature revealed no study claiming bias in the scores themselves though the scores themselves may be indicative of discrimination - e.g. giving minority applicants access only to sub-prime loans even if they qualify for better. But also note that if using biased scores leads to discrimination on the basis of sex or race then there is already a law that prohibits such behavior - for any reason]

Employers base their hiring decisions on many factors that aren’t always in our complete control and can be victims of circumstance. A health emergency that may have ruined someone’s credit may have also caused some bad grades in college.  But GPA is an acceptable piece of information to use and no one proposes regulating using it.  Smart employers will ask why the GPA is low or the credit is bad before making their decisions, because more information in markets is almost always a good thing. For this reason, I don’t think deliberately limiting the information prospective employers can collect is a good idea.

By Patrick Emerson
Oregon Economics Blog

Last week the U.S. Senate  voted 70-28 to approve the Hiring Incentives to Restore Employment (HIRE) Act, a $15 billion bill aimed at creating jobs, helping small businesses, and rebuilding public infrastructure.  However, the bill does not include a further extension of the current COBRA subsides for unemployed workers, nor does it increase funding for state unemployment insurance programs.  Click here to read the New York Times’ coverage of the HIRE Act’s passage.  Click here to read the full text of the HIRE Act.

The key features of the HIRE Act include:

- An exemption from Social Security payroll taxes for private employers for each worker hired in 2010 who previously had been unemployed for at least 60 days;

- A $1,000 income tax credit for private employers for each new employee hired in 2010 and retained for at least 52 weeks and claimed on the employer’s 2011 income tax return;
- An extension of the small business “expensing” tax break for one year, allowing small businesses to continue writing off up to $250,000 of certain capital expenditures instead of depreciating them over time;
- A $2 billion Build America Bonds program, which would provide an optional direct subsidy payment in lieu of a tax credit for tax credit bonds issued for certain school and energy projects; and Expanded federal aid for highway programs.

The HIRE Act now goes to the House of Representatives.  Although some House Democrats have grumbled that the bill does not do enough, it is still expected to quickly pass and become law.

While the HIRE Act does not extend the COBRA subsidy or unemployment insurance, extensions of those programs are not off the table.  Both of those programs are set to expire on February 28, but yesterday Senate Majority Leader Harry Reid proposed language that would extend the unemployment benefits program to April 5, 2010 and COBRA benefits to March 28, 2010.  Click here to read the text of Senator Reid’s proposed COBRA extension.  We expect to see quick debate on Senator Reid’s proposal, either as an amendment to an existing bill or a stand-alone bill, so stay tuned to the World of Work Blog to see if it passes.

As desperate States struggle to balance their budgets, California’s Legislature plans to place a bid on the governor’s desk this month in hopes of reaping up to $150 million annually for state and local coffers. The proposal would force Amazon to start collecting tax from their customers.  The revenue is tiny in comparison to the state’s $20-billion deficit, but supporters say every dollar counts in tight times.

The online retail giant has enjoyed an edge over many competitors in the state because it is not required to collect sales tax from residents who buy books, top-of-the-line plasma televisions, cases of diapers and thousands of other products from its website. The Seattle Corporation has no store, warehouse, office building or other physical presence in California, and the state cannot tax such businesses under a 1992 Supreme Court decision.

New York launched the initial tax on Amazon sales in 2008. North Carolina and Rhode Island have passed similar laws; other proposals have advanced in the statehouses of Virginia, Illinois, Colorado and Hawaii.

California Gov. Arnold Schwarzenegger vetoed a similar effort last year after Overstock .com announced it would cancel all its contracts with affiliates in California. Overstock backed down after the governor’s veto, but renewed his vow to cancel the contracts if the new measure becomes law.  Amazon also said it would cancel its California contracts if the proposal goes through.
In Washington, Gov. Chris Gregoire rolled out a package of proposals last week to balance a $2.8 billion budget deficit with a combination of taxes, fund transfers and federal money.  The various proposed taxes include taxes on candy, bottled water and soda, and raise taxes on toxic substances like petroleum as part of a “balanced approach” to the worst economic times in more than 70 years.

Gov. Gregoire urged the Legislature to fill a $2.8 billion hole in the state budget by making about $1 billion in cuts to programs, services and employee costs; raise about $605 million in taxes; increased federal funds for medical programs; and use about $677 million in budget reserves or fund transfers.

Washington’s Governor is also hoping Congress will approve the $435 million in Medicaid money from the federal government.  However, without the federal money, the state will only have $77 million in the fund for the second year of the biennium forcing Washington to continue its struggle to balance its budget.

The Democrat-controlled legislature spent the month of February increasing spending and debt, raiding the state’s cash reserves and imposing more regulations on Oregon’s struggling businesses instead of reaching out to Oregon’s Main Street businesses to help create private sector jobs for Oregonians.

The legislature’s failure to deal with Oregon’s 11 percent unemployment rate was evidenced by the fact that hundreds of unemployed union members came to the capitol to plead with the legislature to create family wage jobs. Their pleas fell on deaf ears.

Earlier this month, the state’s economist predicted a jobless recovery, and the Legislative Fiscal Office warned of a massive structural deficit looming in the state’s budget. In response, the legislature refused to consider the most meaningful job creation bills and opted instead to increase spending by another $30 million and add 200 more state jobs. Simply put, the legislature did nothing but make matters worse on both counts.

We remain concerned about the detrimental effects of Measures 66 and 67. The business community was hoping their passage would end the hostile partisanship, but it did not. Various industries were targeted with increased regulation and litigation while employer-paid funds were swept away to fuel increased state spending.

Quality of life in Oregon has always been one of the concepts that attract businesses to our state, but the partisan bullying on the part of House leadership adds to the chilling effect on Oregon’s economic recovery. Many of us stand committed to working with any state leader on efforts to control spending and attract capital investment to Oregon. That is how we maintain jobs, improve Oregon’s business climate and attract world-class employers.

Senators Ginny Burdick and Frank Morse offered a plan that looked at returning capital investment to Oregon and protecting higher education from continued deterioration and the House said “no”. There are areas for compromise, but current House leadership shows no interest.

Unfettered increases in spending, raids on the state’s cash reserves including employer-paid accounts, and a reliance on federal bailouts are clear indications that our state’s budget is spiraling out of control. Senator Morse and Burdick’s plan made spending control part of the discussion.

The hyper-partisanship must end. Compromise must be achieved. Calling people “whiners” and saying “there were no alternatives” is not acceptable anymore. We must work together to move forward. “Job creation” is not a statement for a press release. It is a product of a cooperative work environment.

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WASHINGTON, D.C.—The U.S. Chamber of Commerce today said it believes the bipartisan efforts of Senators Wyden and Gregg to begin the process to reform the tax code take steps in the right direction, addressing two major concerns in the tax code – the high marginal corporate tax rate and onerous and burdensome alternative minimum tax.

“While this is a great beginning, with tax reform the devil is always in the details,” said Dr. Martin Regalia, chief economist for the Chamber. “This proposal includes tax increases which are intended to pay for the proposal’s broad benefits but which fall disproportionately on specific sectors, industries, and income groups.”

The Chamber believes that a critical aspect of any tax reform proposal must be clear transition rules on how we get from here to there.

“We anxiously await further details from Congress on how this transition would be accomplished to ensure that the costs and benefits are synchronized,” Regalia said. “The Chamber looks forward to working with the authors of this proposal to address these issues.”

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

# # #

SALEM – The Oregon Public Employee Retirement Fund will recover losses that were attributable to a pattern of poor disclosure and bid-rigging by insurance giant American International Group Inc. (AIG), under a settlement announced today by State Treasurer Ben Westlund and Attorney General John Kroger. The company agreed to pay $8 million to settle the lawsuit, which alleged securities fraud. The suit was filed by the State Treasurer’s Office and Public Employee Retirement System Board.

“We go to great lengths to protect Oregonians and their public investments,” said Treasurer Westlund. “This settlement is another example of how your State Treasury is protecting the public good.”

The State Treasury, with the guidance of the Oregon Investment Council, manages the state’s investment portfolio. The largest fund is the Oregon Public Employee Retirement Fund, which is invested globally and had a value of $51.5 billion as of Jan. 31.

Oregon’s public employee retirement system (PERS) has roughly 320,000 working and retired members, including police officers, firefighters and schoolteachers, who rely on the pension fund for a substantial part of their retirement security.

“We will take decisive against Wall Street when they violate the law,” said Attorney General Kroger.

According to the initial legal complaint, AIG’s actions caused the pension fund to lose about $15 million because shares of the company were inflated in value between 2000 and 2005. The too-high price was caused because the company repeatedly failed to disclose unethical and improper activities, including a bid-rigging scheme with other insurers, the lawsuit said.
AIG was one of the major players internationally in the proliferation of credit default swaps, a debt accounting maneuver that has been cited as a catalyst for the market collapse of 2008 and 2009.

The company was found to have employed more of the credit default swaps than they could pay for, and it failed to properly account for that debt in regulatory filings.

The value of AIG stock declined repeatedly after the corporate behavior was unearthed, and after the company corrected what were then-misleading corporate disclosure documents.

AIG admits no guilt as part of the settlement. The state will receive the $8 million in March. AIG is a Delaware company whose principal location is in New York.

###

It is often thought of as an honor to be asked to serve on boards of directors.  However, those asked may be in for a surprise when it comes to the personal liability to which they may be exposing themselves.  An astute board prospect would certainly ask to see the articles and bylaws to see the degree to which these documents provide for indemnification and the advancement of expenses that might be incurred as a director.

Do these provisions protect the proposed director?  Maybe, if the circumstances are right.  Otherwise, no.

A recent Delaware court found that a former board member was not entitled to advancement or reimbursement of defense expenses after the board amended the bylaws to eliminate this protection for former directors, even though this amendment was made after the alleged bad acts or omissions occurred and after the former director ceased to be a director.

While Oregon courts are not required to follow Delaware law with respect to Oregon entities, they may reach the same conclusion.  Also, many entities operating in Oregon have been formed under Delaware law.  Further, a similar position could be taken as to managers of limited liability companies.

The Oregon State Bar is considering whether to propose legislation to the 2011 legislative session to address this problem, but pending some legislative fix being enacted in the future, how should persons willing to serve as directors protect themselves against such retroactive changes in the rules?

Persons considering serving on boards and current directors should seek an indemnification agreement from the entity as a condition of service or continued service.  This agreement can be limited to certain acts or omissions, based upon the satisfaction of certain conditions (such as meeting certain standards of conduct), cover only certain liabilities or expenses, or be as broad as the law allows.  By making it an agreement with the entity, it cannot be changed retroactively without the consent of both sides.

The final question might be how does a person insure that an entity will have the funds available to meet such indemnification obligation?  That is where insurance comes in.  However, a person considering serving as a director should not rely too heavily on insurance because there are limits, deductibles and exclusions in these policies that may still leave the director personally exposed.

If you are a director or are considering serving in such a role or if your company or organization wants to induce the best people to serve as directors and reassure its directors that it will indemnify them under circumstances involving good faith and the exercise of the business judgment rule, contact us to assist you in drafting an indemnification agreement that “locks in” the protections that are currently available in most articles or bylaws.  We can also review any director’s errors and omissions on an insurance policy to see if there are any significant holes in coverage.

If you are involved in a professional practice, there are additional issues and planning steps to consider and a great deal more at stake.

For more information about board membership, please contact Bob Winger at Rwinger@dunncarney.com

Today the Equal Employment Opportunity Commission (EEOC) releases new regulations that will define employers’ “reasonable factors other than age” or “RFOA” defense under the Age Discrimination in Employment Act (ADEA).  The new regulations would reflect two Supreme Court cases interpreting the RFOA defense: Smith v. City of Jackson (2005) and Meacham v. Knolls Atomic Power Laboratories (2008).  Click here to read the EEOC’s Proposed ADEA Regulations.

The Supreme Court held in Smith that employment practices having a disparate adverse impact on workers age 40 and older may violate the ADEA.  The Court in Meacham then ruled that when a plaintiff proves such an adverse impact, employers have the burden of proving that the practice that caused the adverse impact was based on reasonable factors other than age.”  Since Smith and Meacham, however, there have not been any interpretive regulations under the ADEA to guide employers on the RFOA defense.

The proposed rule defines a “reasonable factor other than age” as “one that is objectively reasonable when viewed from the position of a reasonable employer (i.e., a prudent employer mindful of its responsibilities under the ADEA) under like circumstances.  To establish the RFOA defense under the new rules, an employer must show that the employment practice was both (1) reasonably designed to further or achieve a legitimate business purpose and (2) administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer.  The rule also provides a non-exhaustive list of six factors relevant to determining whether an employment practice is “reasonable”:

Whether the employment practice and the manner of its implementation are common business practices;

- The extent to which the factor is related to the employer’s stated business goal;
- The extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately (e.g., training, guidance, instruction of managers);

- The extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;

- The severity of the harm to individuals within the protected age group, in terms of both the degree of injury and the numbers of persons adversely affected, and the extent to which the employer took preventive or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
Whether other options were available and the reasons the employer selected the option it did.

The EEOC’s proposal also explains that the RFOA defense turns on the facts and circumstances of each particular situation and whether the employer acted prudently in light of those facts.

An employer who is considering a change in employment practices — such as a layoff, change in employment qualifications, etc. — should examine the impact of the change to determine whether it may create an adverse impact based on age.  If it appears that it may, the employer should then apply the EEOC’s six factors to see if it can adequately defend the change as based on reasonable factors other than age.  If the change does not appear to pass each of the EEOC’s six factors, the employer may want to consider altering the change to reduce the impact or abandoning it altogether.

As Congress readies for the inevitable partisan debate over how best to address the expiring 2001 and 2003 tax cuts, U.S. Senators Ron Wyden (D-Ore.) and Judd Gregg (R-NH) today offered a bipartisan solution. The “Bipartisan Tax Fairness and Simplification Act of 2010″ takes a comprehensive approach to reforming the tangled web of nearly 10,000 exemptions, deductions, credits and other preferences that currently clutter the U.S. tax code in order to create a simpler and fairer system that American workers and businesses can more easily navigate. By eliminating many of the tax expenditures that benefit narrow special interests, Wyden-Gregg offers fiscally-responsible tax-relief to the middle class and growth opportunities for American businesses to create jobs and compete globally.

“Senator Gregg and I are demonstrating that there is room for Democrats and Republicans to agree on tax reform,” said Wyden. “By simplifying the tax code and scaling back tax breaks for special interests, we can give everyone an opportunity to get ahead. Businesses of all sizes will be in a better position to compete and grow jobs. Working families will keep more of their hard earned dollars and everyone will spend a lot less time filling out tax forms.”

Senator Gregg stated, “I am pleased today to join Senator Wyden in introducing this bipartisan tax reform package. For far too long, our tax system has been overly complicated, burdensome and unfair to taxpayers and to small businesses that are the economic engines of our nation. This investment-oriented proposal will bring us back to common-sense tax laws that encourage people to create jobs and make our nation more competitive. A key element to this proposal is a flat 24% corporate tax rate to ensure our competiveness in the global market and create jobs in America.”

Gregg continued, “This legislation will also simplify the tax process to a one-page form and reduce the tax burden on working families. Tax reform shouldn’t be viewed as a partisan issue, but rather a place where we can work together to encourage job creation and strengthen our economy. This proposal echoes the successful tax reform championed by President Reagan and Bill Bradley during the mid-1980s. And it is time that we return to this sort of common-sense, bipartisan approach.”

Overall the “Bipartisan Tax Fairness and Simplification Act” follows the successful model of the bipartisan Tax Reform Act of 1986 which funded tax relief by eliminating a number of special interest tax breaks. Wyden-Gregg will provide tax relief for most families making up to $200,000 a year with a similar approach.

Wyden-Gregg will eliminate the Alternative Minimum Tax - which raises taxes for millions of middle-class Americans - and will reduce the number of individual tax brackets from the current six to three: 15 percent, 25 percent, and 35 percent. Middle-class and low-income taxpayers will benefit from Wyden-Gregg’s near tripling of the standard tax deduction, which will not only reduce tax bills but relieve Americans of the stress and responsibility of maintaining the records and receipts needed to document itemized deductions. These simplifications alone will make it possible for most taxpayers to file a simple one-page 1040 form and in an effort to make paying taxes even simpler, individuals and families can request that the IRS prepare a tax return for them to review and sign.

Wyden-Gregg takes steps to create a level playing field for businesses of all sizes. To encourage small business growth, more than 95 percent of small businesses - those with gross annual receipts of up to $1 million - will be able to permanently expense all equipment and inventory costs in a single year. To help American corporations compete internationally, Wyden-Gregg reduces the top corporate tax rate and replaces the existing six corporate rates and eight brackets with a single flat rate of 24 percent. Currently, U.S. corporations pay the second highest tax rate among industrialized countries. Wyden-Gregg reduces corporate tax rates approximately 30 percent-below the corporate tax rates of Canada, Germany, France, and many other U.S. trading partners - ensuring that U.S. domestic and multinational corporations can better compete in a global economy.

Additionally, Wyden-Gregg streamlines the tax code by eliminating a number of specialized tax breaks that favor one business sector or group of individuals over another. Removing these breaks for specific groups will not only make the tax code fairer and raise funds to extend tax relief on a more equitable basis, these simplifications will make it harder for businesses and individuals to avoid paying their taxes. This clean-up will also include the elimination of incentives to export jobs and keep foreign earnings overseas.

By Dan Popkey , Idaho Statesman (Boise, Idaho)
February 20, 2010

Nike founder Phil Knight is hopping mad at $727 million in tax increases on corporations and the wealthy in Oregon. Idaho leaders long to catch their rich neighbor’s eye.  Idaho has wooed Nike before - a revelation offered by Lt. Gov. Brad Little, who salivates at the prospect of landing one of the world’s best-known brands.   “Phil Knight was up front: Don’t change the tax code, and if you do, we’re going to do something,” Little said. Knight hasn’t expressed interest yet, Little said. “But we’re gonna call him.”  Knight is No. 24 on Forbes’ list of richest Americans, with a net worth of $9.5 billion. He gave $100,000 to the campaign to defeat Measures 66 and 67. Both tax bills passed Jan. 26.

In a Jan. 17 guest opinion in The Oregonian newspaper, Knight called the measures “Oregon’s Assisted Suicide Law II,” writing, “They will allow us to watch a state slowly killing itself. They are anti-business, anti-success, anti-inspirational, anti-humanitarian, and most ironically, in the long run, they will deprive the state of tax revenue, not increase it.”

Knight then named 10 companies that have either left the state, shut down or become controlled by non-Oregonians. A philanthropist who’s given the University of Oregon Ducks more than $300 million, Knight wrote, in the third person, that Nike’s “founder and chairman is not merely an economic man. He has webs between his toes. But he, too, has some limits.”

Nike spokeswoman Erin Dobson wouldn’t comment on the company’s interest in Idaho in the 1990s. But she ruled out Nike moving its headquarters from Beaverton, writing in an e-mail, “Nike has no plans to relocate.”

How about expansion elsewhere? “Nike is a growth company,” she wrote. “When and where there is opportunity for strategic growth we will take advantage of it.”

That could simply be Knight venting. The 1990s search was driven by complaints about multiple taxing authorities in Oregon, said Jeff Malmen, Gov. Phil Batt’s chief of staff, who attended a meeting with Nike executives in Batt’s office. The visit likely occurred in 1997, according to the best recollection of several officials.

Nike also looked at Washington, Nevada, Colorado, New Mexico and British Columbia. In the end, the company resolved a dispute with Beaverton and expanded what is now a 193-acre campus with 17 buildings named for Nike-affiliated athletes.

Little takes heart knowing Nike seemed keen on Idaho. “They’ve got a high frustration level with governance in Oregon and they’ve been here before,” Little said.

He showed the company a 640-acre parcel he owned north of Eagle as a possible site for a satellite campus. Little’s land included a piece of Goodale’s Cutoff, a branch of the Oregon Trail. “These guys were going to spin it to Nike that they could go out and run on the Oregon Trail.”

Department of Labor Director Roger Madsen helped develop the pitch. “We created a beautiful video that showed a lot of people in athletic situations - golfing, skiing, tennis, running - wearing Nike apparel,” Madsen said. “It was very attractive.”

The psychological effect of landing such a big fish would do wonders, Little said. “Nobody’s going to headline that Joe’s Car Wash hired two more people. An Areva in Idaho Falls, an F-35 here or a Nike here would change the mental perception about the economic doldrums we’re in.”

Gov. Butch Otter also has Nike on the brain. He’s working on a legislative package to lure business. Though he didn’t mention Knight’s pique, he knows that plenty of Oregon business leaders feel the same way.

Otter said he seeks “incentives for folks to take flight from Oregon and come over here, because we’re getting a lot of phone calls about their tax increase.”

Department of Commerce Director Don Dietrich said he has strategies for businesses in Oregon, Washington and California, where taxes are higher and regulation more aggressive.

Dietrich has gleefully adopted Knight’s moniker for the Oregon law - “Suicide Bill” - saying, “Our phones started ringing when that bill passed, and we have aggressively been answering those calls.”

Idaho’s advantages include stable and competitive taxes, cheap power and an “accessible government,” Dietrich said. “We basically have a very friendly business environment. We are swinging pretty hard, particularly in the Western states.”

Dietrich is realistic enough to know that dislodging Nike from Oregon presents astronomically long odds. “People don’t just pick up and move to move. It’s expensive, it’s disruptive.”

That’s especially true for a company so closely identified with Oregon and a single institution, the U of O.

But Knight also is friends with Boise State’s Chris Petersen, who coached Duck wide receivers from 1995 to 2000. His Broncos wear Nike gear. As unlikely as it is, the prospect of a bigger Nike presence in Idaho has real appeal in a state battered by a poor economy, dwindling tax revenue and its own loss of corporate titans in recent years.

http://www.idahostatesman.com/2010/02/20/1087883/could-nike-swoosh-into-idaho.html

The Senate Rules Committee passed a measure that would permanently put in place annual sessions. This would be a constitutional change and would require a vote of the people in the November election. Polling recently showed Oregonians in favor of annual sessions. The Senate should vote on the measure later this week.

Below is a list of other bills we’re tracking and their status:

House Bill 3632 would require the Oregon Health Authority to study the viability of implementing a pay or play system of employer-based health insurance coverage in Oregon and to report the results of the study. If a system is viable, OHA will propose a plan for implementation for interim legislative committees to consider. This bill has moved through the House and is up for a hearing in the Senate Health Care committee shortly. Although we would oppose an employer mandate, the Oregon Health Authority already has the authority to study this issue.

House Bill 3653 would modify certain definitions and exceptions applicable to the prohibition against employers taking adverse employment actions against employees who decline to attend meetings or participate in communication concerning the employer’s opinion about religious or political matters. This legislation recently passed the House against our objections and those of several other business organizations. This legislation modifies the employer gag rule that was passed by the Legislature in the last regular session. There is currently a lawsuit under way by employers, because we believe it violates federal labor laws.

House Bill 3655 would modify the definition of “emergency benefit period” to begin on the first week that begins at least 14 days after the effective date of the act and and ending when the total of Oregon emergency benefits paid reaches $19 million. This legislation extends unemployment benefits. It passed the House and is up this week in the Senate where it is expected to pass.

House Joint Resolution 100 proposes an amendment to the Oregon constitution establishing the right of all Oregonians to equal opportunity to lead healthy and productive lives. This legislation has been introduced by state Rep. Mitch Greenlick in the last three sessions.  We have opposed this proposal, and the legislation died on the House floor this week after receiving a 30-28 vote.

Senate Bill 1003 would authorize the director of the Department of Consumer and Business Services to grant an exemption from the 95 percent retention rate requirement for association health plans, according to rules adopted by the director. This legislation will allow association health plans that fall below the 95 percent retention requirement to receive a waiver from DCBS allowing them to continue to offer plans. We support this legislation, and it passed the Senate last week unanimously and had a hearing on Monday in the House. The legislation will be back up in the House Healthcare Committee Feb. 24 and should move forward. DCBS did indicate it would like to revisit this issue in the next regular session.

Senate Bill 1009 would prohibit the use of plastic bags as checkout bags. This legislation was opposed by a number of businesses and organizations and died in the House Environment Committee last week. Proponents indicate they will pursue this issue in the next regular session.

Senate Bill 1032 would create an unlawful practice of manufacturing, distributing, or selling liquid or food in containers made with bisphenol A, if the liquid or food is intended primarily for consumption by a child under three years of age. This legislation has been limited to baby bottles and sippy cups which are less of a concern than the original broad language.  This legislation passed out of the Senate committee but was killed in a 15-15 vote on the Senate floor.

Senate Bill 1045 would limit the use of credit history for employment purposes to certain circumstances. Although we opposed this legislation, it passed the Senate this week with 17 yes votes. While the language has been modified to allow employers to check a potential employees’ credit for “substantially job related” reasons, we believe this language is undefined and will be confusing for employers. We will continue to oppose this legislation as it moves to the House.  We continue to need examples of businesses that use credit checks as a tool for hiring.

Senate Bill 1059 would reate a process for adoption and implementation of plans for reducing greenhouse gas emissions caused by motor vehicles with gross vehicle weight rating of 10,000 pounds or less. This legislation has now moved to Ways and Means because of the fiscal impact. It is unclear at this point whether or not it will move forward in this special session.

WASHINGTON, D.C.— A new analysis released today by the U.S. Chamber’s Institute for 21st Century Energy reveals that even if emissions reduction pledges made under the Copenhagen Accord were adopted, the world would still see a significant rise in greenhouse gas emissions, primarily because of growing emissions from developing countries.  In a new report titled “Copenhagen Accord By-the-Numbers,” the Energy Institute analyzed all 2020 emissions reduction targets submitted by developed and developing nations to the Copenhagen Accord.  Under the Institute’s analysis, even if the targets submitted are adopted, global emissions in 2020 will still be above 2005 levels by as much as 20 percent.

While not formally adopted by the UN’s Framework Convention on Climate Change (UNFCCC), the Copenhagen Accord is a political agreement to stimulate action, with parties to the UNFCCC invited to submit their individual emissions reduction pledges and other actions to the UNFCCC secretariat last month.

“The road to an international climate agreement is a very difficult one, as evidenced by the challenges negotiators faced in Copenhagen,” said Steve Eule, vice president for climate and technology at the Chamber’s Institute for 21st Century Energy.  “Looking ahead, with many of the most contentious issues in the climate negotiations unresolved, there’s an opportunity to open up a new chapter that focuses less on unrealistic targets and timetables and more on cooperation among governments and the business community.”

The Energy Institute has called for a realistic international approach that must include a larger role for the business community and emphasizes energy efficiency and new and advanced technology as integral to global energy and climate policy.  Other priorities for the U.S. Chamber include reducing trade barriers for energy technology and maintaining strong intellectual property rights.

Last month, the Institute released an in depth review of what transpired in Copenhagen, along with a guide to possible paths forward in international climate negotiations.  In September, the Chamber hosted the first meeting of the Major Economies Business Forum, designed to bring leading global business organizations together to work on energy and climate issues.

The mission of the U.S. Chamber of Commerce’s Institute for 21st Century Energy is to unify policymakers, regulators, business leaders, and the American public behind a common sense energy strategy to help keep America secure, prosperous, and clean. Through policy development, education, and advocacy, the Institute is building support for meaningful action at the local, state, national, and international levels.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

SALEM—From anvils to zeppelins, the personal property you use in your business may be taxed.  If you’re a business owner, the time to file your personal property return is March 1, according to the Oregon Department of Revenue.  Oregon law requires that all business owners-even owners of home-based businesses-file a return with their county assessor that lists all business-related personal property.  Personal property includes anything you use for business purposes. It also includes leased equipment, such as copiers.

The county assessor calculates the tax due each year based on the business owner’s personal property return. The assessor may cancel the tax if total personal property is valued under $15,000.

However, even if your business’ personal property value falls below $15,000, you still must file a return, according to Michele Pedersen, a department tax analyst.

If you’re a business owner, you must file a return each year even if:

you didn’t receive a tax return form from the county in which your business property is located;
the tax was cancelled in prior years;
you sold or closed the business during the year; or
you sold or disposed of the personal property.

“If a business owner files late,” Pedersen said, “there is a penalty that varies from 5 percent to 50 percent of the taxes due, depending on how late the return is filed.”

Personal property is included as part of the business owner’s property tax statement. The tax is due each November 15.

Information, forms, and a list of items considered taxable personal property.

You may also contact your county assessor’s office or call the Oregon Department of Revenue, 503-378-4988 (Salem or outside Oregon), or toll-free from an Oregon prefix, 1-800-356-4222. For TTY (hearing or speech impaired), call 1-800-886-7204; Salem, 503-945-8617. Customer service representatives are busy during tax season, so you may experience extended wait times.