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Local businesses take the plunge and embrace higher taxes, linked to spending cuts and adequate spending on public education.

COURTESY: CLOUDABILITY - Mat Ellis, CEO of Portland software company Cloudability, says his firm is preapred to pay more corporate taxes, as outlined in HB 2830. Ellis says public education should be better funded, because it is hard to attract good workers when they realize what the public schools are like in Oregon.

Since Measure 97 failed at the ballot, politicians and business leaders have been locked in their positions about who should pay how much tax. Now some Portland businesses have begun to speak out in favor of paying more for essential services.

A loose group of 100 companies organized under the banner Business for a Better Portland, are backing House Bill 2830, which seeks to increase corporate excise tax rates.

Business for a Better Portland began in 2016 as Portland Independent Chamber of Commerce or PICOC ("peacock"), before rebranding in 2017. It sees itself as the younger, more progressive alternative to the Portland Business Alliance. It runs a monthly crowd funding campaign around progressive causes and has hired a full time chief collaboration officer.

According to their website, their goal is "to ensure Portland is an equitable city where prosperity can be shared by all. We believe that better businesses will be built as we build a better Portland."

Sen. Mark Hass, D-Beaverton, chair of revenue and tax committees, and Speaker of the House Tina Kotek, D-Portland, have a plan to create a new tax on certain businesses and curtail public spending.

Hass and Kotek's proposal would temporarily increase corporate income taxes in 2017 and 2018, which would raise $900 million. The corporate income tax would be repealed in 2019 and replaced with a corporate activity tax on businesses with annual sales of at least $3 million. Businesses with sales less than $3 million would pay a flat fee of $250.

Business and labor leaders have remained divided into right- and left- leaning camps. But Business for a Better Portland is trying to break the logjam.

Ninety-three months of expansion

Ashley Henry, the chief collaboration officer for BBPDX, released a statement on behalf of the organization last Tuesday.

It read in part: "Our members represent new industries and growing sectors of the city's economy. In Oregon's 93rd month of economic expansion, our state's leaders should not be considering eliminating teachers from classrooms and in-home caregivers for seniors and people with disabilities. The proposed budget cuts that would be required if legislators fail to act will undermine critical state goals: improved graduation rates for students of color, improved STEM education for workforce readiness, and equity programs to aid historically disadvantaged groups."

The statement praised the governor and legislature for "moving forward to develop cost containment strategies that many members of the business community called for during the divisive Measure 97 campaign."

Henry said BBPDX intended to stay local to Portland but has gotten sucked into state politics by the urgency of "the budget crisis in Salem combined with one-sided calls from a narrow set of business interests to delay structural revenue reform yet again."

The letter continued, "The long-term costs of disinvesting in schools and public services will be far greater for our city, state and, of course, our businesses, whose success depends on being part of healthy communities."

"We remind our leaders that what they are hearing 'inside the building' is not representative of the entire diversity of business leaders across the state."

Survey says

BBPDX surveyed 100 members in March and received 35 replies back, which Henry says were unanimous in favor of paying more taxes to support public education.

Mat Ellis is the Founder & CEO of Cloudability, a software company that analyses the speed and quality of online interactions.

"We're a supporter of this proposal, and we were against Measure 97," Ellis told the Business Tribune. "I think there should be compromise and nuance from legislative leaders."

He believes that with two years of public comment and no more pyramiding — repeatedly taxing sales down the supply chain — the proposal would be fairer.

"Most important is we're being heard when we say 'This is how it affects my business."

Portland's Mississippi problem

He says the point about changing tax legislation is everyone must give some quarter: people paying taxes and the people benefiting from the spending.

"It's unpleasant. No one is happy in the end if it's done right."

Cloudablity is a venture capital-backed software as a service company that does not yet make a profit.

"We're a loss-making, high growth company that covers our losses with VC money. Our money goes on payroll. But under this plan we will pay a significant amount of tax. And we're happy to support that, because we need investment in the things people come to work for us for."

He's talking mainly about public education. "People come to Portland and after a few years they put down roots and start a family. Then they find out the schools are on a par with Mississippi" in terms of High school graduation rates. "No one comes in to my office and says 'I'm quitting because of the schools in five years. But if you want them to stay you think 'Maybe fix the bridge?'" he says, referring to politicians. "If we all start yelling nothing will change."

As CEO Ellis is always trying to lure staff to Portland. But contrary to the magnetic myth of Portlandia, it's a two way street. "We recently had four people move away to places like Berlin, Australia and London. They all have kids, and they perceive there is better support better support for education there. They are looking at 10 or 15-year windows. One guy instaquit so he could be in Berlin before his second child was born."

He says he and his colleagues are keen for both sides to talk to each other and compromise.

"If not there'll just be another costly ballot measure, and people sticking their fingers in their ears."

The U.S. is hard enough

Ellis says his company is seriously considering opening an office in Vancouver B.C. to attract people to a west coast time zone. (He lives in Vancouver, Washington.)

"Getting into the U.S. is almost impossible now. The system for skilled immigrants is oversubscribed." The cost of the visa, lawyers and flights can come to $30,000 per hire, which is too much for most Portland companies. "That's why Google and Facebook have so many offices around the world. As the boom is on and unemployment is at a 17 year low, we have to turn to people overseas."

He adds, "At Cloudability we've been able to recruit great people because we have a great brand and do interesting things, but it only goes so far."

He adds that his contribution to the debate is to say "There are businesses in the state who believe in compromise. We hate uncertainty. We want to keep that reputation real: part of it is compromise, and part is careful investment in the right things. And not yelling at each other.


Joseph Gallivan
Reporter

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