In Oregon, there’s a bill from the senate that would help small towns enjoy restored benefits and incentives that come with enterprise zones. Of course, the benefits and incentives are tax breaks. However, there are some really good things that come with having tax breaks for newly started and relocated businesses. Sadly, I’m not so sure that everybody understands why it’s such a good thing.
But let’s take this a little further than just the senate bill. Oregon should look into offering tax breaks like this to all new businesses that start up or relocate to the state. Heck, even New York is doing it!
Why Some Oregonians Don’t Like Tax Breaks
Many people in Oregon don’t like it when the legislature hands out tax breaks for businesses because the state doesn’t have a sales tax. This means that Oregon relies heavily on income, property, and business taxes as well as some excise taxes. So it’s easy to understand when Oregonians get upset over the fact that a business may not be paying its fair share.
Think about it this way: There’s a business in your town that could pay a lot of money in taxes to the state and to your town. Your town needs a lot of maintenance done and the state isn’t paying for it. This business relocated to your town in hopes of lower taxes. Now, seeing how this maintenance needs to be done on roads, sidewalks, buildings, you name it, you might feel strongly about the state allowing this business pay much less in taxes. I probably would, too.
Another part of why many Oregonians are against tax incentives like this is because they believe that it decreases funding for schools, roads, and other state-funded things. Not that long ago, the education budget for the state infuriated Republicans in the legislature. They said that it wasn’t enough. I’m sure that many would use this as a reason why we shouldn’t offer tax breaks.
Tax Breaks Offer Job Growth
No matter your views on tax breaks in small towns, you might like to know that there’s a lot of good that can come from tax incentives like this. First of all, there’s the potential for job growth in your area. If a business relocated to your area because it liked the low taxes and could grow quicker there, you have the potential to see a lot of jobs added to your community.
Sure, maybe there would be hirings of 10 to 20 people at a time. But Oregon has more small towns than highly populated areas. You never know. There could be 50 job openings for a company trying to restore the timber industry in Oregon and doing so in a way that respects the environment. It’s like pocket change. If you spend a lot of cash here and there, and save the change you get, you’re going to find that you have a lot of money saved up in that jar.
Tax Breaks Keep the Money Local
Another reason why these kinds of tax incentives are good is because it keeps the money local. Remember all that work in your town that needed to be done? It can still get done. The reason why people offer tax breaks to businesses is because the business pays less to the state, which allows it to retain more money. The more money that is retained, the more people that can be hired and the quicker that business can expand.
The beauty of keeping the money local is that you don’t really lose out much on tax revenue. If 500 jobs were added to an area due to tax breaks on businesses, the city and state still collects taxes from individuals. Instead of getting $300,000 from the businesses, the government can get $400,000 from the individuals. Thus, by not counting the $300,000 from business tax, the government actually gets $100,000 more than it originally would’ve gotten from the businesses alone.
Keep in mind that while the government could have received $700,000 by taxing the businesses, the government could also not have received $700,000. Those businesses didn’t have to start up or relocate to Oregon. They did it on their own free will. You don’t slap the hands of those trying to help your economy. You should help them a little. As a matter of fact, New York is doing something similar.
Oregon Should Follow New York’s Lead
Yes, blue state New York is offering tax breaks for businesses that start up or expand to its state. You have to be starting up or expanding on or near college campuses, but that’s a breeze since that includes community colleges. But those that do have the incentive of paying no taxes for 10 years. That’s millions, even billions, of dollars that New York is sacrificing in order to grow its economy.
If New York can do that, then why not Oregon? Sure, it’s going to sacrifice a certain amount of money. But as I mentioned earlier, there is great potential to make even more money from the individuals that would work there rather than from taxing the business itself. Over the course of 10 years, that small handful of businesses would bring in $4 million that Oregon didn’t have before. If there were 100 businesses that decided to relocate or start up in Oregon, with this kind of tax revenue, there would be an additional $400 million pouring into the state over 10 years.
Oregon Should Keep the Money Local and Grow the Economy
Another very good reason to keep more of the money local is because cities in Oregon wouldn’t become so dependent on the state for funding. If school districts had a lot of extra funding from this kind of expansion of the economy, we would need a smaller budget for the state. It’s not even just about the school districts. Cities could pay for its roads and sidewalks. People could save a little more and even invest some money. A chain reaction could set off entrepreneurs in the state, which adds even more jobs and tax revenue.
It’s a big investment that would have a crazy payout as a result. More companies just might hop over the border from neighboring states. PeaceHealth, BurgerVille, and Papa Murphy’s are just a few examples of who might relocate to Oregon if they had the right incentives. Idaho and Northern California has even more companies that might decide to expand with some offices to Oregon. The possibilities are endless. Especially in the rural areas in Eastern Oregon.
Some locations that could benefit from a similar idea to New York’s would be Pendleton, Bend, Oregon City, Astoria, The Dalles, La Grande, Newberg, Newport, Corvallis, Wilsonville, and many others all over the state. Money would stay local, economies would grow, and, overall, people would be happier.