Local businesses applaud the post-election results of Measures 1107 and 1098
On November 2nd, with a near two-thirds margin in each case, voters passed Measure 1107 and rejected Measure 1098.
The 1107 vote repealed taxes and fees imposed on state businesses, while 1098 tossed out the idea of an income tax on residents making more than $250,000.
Not just a "junk food tax"
Heidi Schultz, governmental affairs manager for Vancouver-based Corwin Beverage Co., said at the heart of the state's so-called "junk food tax," there was a lot more going on. In addition to taxes on candy, carbonated beverages and bottled water, Schultz said some Washington food processors saw their business and operations tax rate triple.
Shultz believes these taxes and fees put Washington businesses at a competitive disadvantage, especially in a border community. She said the tax also affected potential business expansion, as her firm had to pay $80,000 in taxes on their July 1st inventory.
"That could have paid the wages for two people," she said.
Tim Martin, president of both the Washington Beverage Association and Elma-based Harbor Pacific Bottling, said Washington-based bottlers' net revenue numbers were down 50 percent more than Oregon-based revenue figures.
However, Martin and Schultz agreed that the long-term precedent was even more disturbing than the immediate effect of the taxes and fees. Almost 30,000 state businesses and organizations banded together to support the tax-cutting measure.
"This wasn't just a fight for today," said Martin. "It was a fight for the future."
A trojan horse
Fisher Investments executive Ken Fisher called Measure 1098 a "Trojan horse" for an across-the-board Washington income tax. Fisher's firm is based in California, but is building a five-story office building on the west edge of Camas, and has already relocated about 100 employees to the area.
Fisher said every state that has instituted an income tax similar to 1098's proposal had reduced the income level to middle class within ten years.
"It wouldn't be very long before all my employees would be taxed," said Fisher.
Ron Frederiksen, president of Vancouver-based RSV Building Solutions, said small business owners were "universally alarmed" about 1098. He explained that many of them are S-corporations, whose earnings pass through to the owner's personal income tax statement. According to Frederiksen, virtually every business owner he contacted said they were waiting to make expansion or hiring decisions until 1098 was settled. If Measure 1098 passed, he said businesses were going to either avoid expansion, or move.
"People forget businesses are mobile," said Frederiksen, who pointed to a number of states on the East Coast that passed measures similar to 1098. He said companies there actually saw tax receipts go down, but only because firms relocated to more business-friendly states.
Frederiksen said that more taxes, whether it's on candy or income, are not the answer to the state's budget woes.
"We have all had to be more efficient by cutting benefits and expenses," said Frederiksen. "The state government has to do the same."
