Legislative Updates for North Clackamas Chamber of Commerce – as of 09/23/2015 – Get this article in a PDF
Minimum Wage. We believe there will be another concerted effort in 2016 to pass a minimum wage increase along with legislation to allow local governments to increase their own minimum wage levels even higher. Last session, House Speaker Tina Kotek (D-Portland) sought legislation to increase the minimum wage to $13 per hour and allow for higher local minimum wages. There is every reason to believe a similar proposal will be back.
The politics of this issue are made complicated by several factors: (1) progressive activists do not want to see a minimum wage proposal less than $15 per hour, (2) some business groups are actively seeking a “compromise” that would increase the minimum wage up to $12 or more per hour, (3) there is a looming ballot measure that would increase the wage to $15 per hour, and (4) there is a critical mass of moderate democrats who do not want to see further cost mandates on small business in addition to the paid sick leave and retirement plan mandates already passed by the 2015 legislature.
Corporate Tax Disclosure. There are strong indications that a corporate tax disclosure bill might be in the works again for 2016. Such a bill would require certain C corporations to disclose sensitive – and even proprietary – tax and business data to the Secretary of State to be posted on a public website. This bill is an attempt to politicize business tax returns.
Why do we suspect another effort to pass this bill? Because the lone Democrat on the House Revenue Committee who blocked this bill, Rep Tobias Read (D-Beaverton), was recently removed from the committee. Changes in committees are relatively rare between sessions. From a policy perspective, the only reason to replace Rep Read would be to pave the way for this legislation in the House. The North Clackamas Chamber, as well as the OSCC strongly oppose the required public disclosure of otherwise private business tax information.
Corporate Tax Measures Appear Imminent. Oregon’s government employee unions have filed five versions of a 2.5% gross receipts tax and two versions of a personal income tax increase for the November 2016 ballot. We expect them to move forward to qualify one of each, selecting the measures based upon their polling and political tactics.
Initial estimates from the Legislative Revenue Office indicate that these measures would raise personal income and business taxes by nearly $7 billion – or over 30 percent. To put this in context, the current state budget is roughly $19 billion. If voters approve these tax increases, the size of the state budget would increase more than one-third.
The proposed tax increases are 12 times larger than the Measure 66/67 tax increases passed by Oregon voters in 2010. Measures 66/67 raised taxes personal income and business taxes by $540 million.
The 2.5% gross receipts tax would apply to all business revenue above $25 million for Oregon C corporations. The measures are expected to raise taxes on C corporations by $5.5 billion per biennium. The unions have filed five different versions of this same concept.
On the personal income tax side (which would also affect business owners, S-Corps, Partnerships, and LLCs), Initiative 24 would raise the personal income tax rate to 10.8% for income above $125,000 and 11% for income above $250,000. Initiative 26 would raise the personal income tax rate to 11.5% for income over $125,000, 13.5% for income above $250,000 and 15.5% for income above $500,000.
If one of these initiatives passes, the individual owners of S-corporations, owners of limited liability companies and partners of partnerships operating in Oregon would experience a major increase in their Oregon income taxes of $1.25 billion.
Patent Reform Act – Innovation Act of 2015 (H.R. 9). We have already written letters to our State Legislative Officials in support of patent reform. Abusive patent litigation is a problem that only continues to grow – in 2013, patent troll litigation reached a record high, up 13 percent over 2012 and more than a tenfold increase over the past decade. Lawsuits brought by patent trolls were up nearly 42 percent in the first quarter of 2015 over the previous quarter.
While there is a perception that patent trolls mainly target tech companies, the truth is that they target a broad range of American businesses: large and small, tech and main street. In fact, since 2012, patent trolls have sued more non-tech Main Street companies than tech companies. Employers including realtors, homebuilders, restaurants, convenience stores, truckers, hoteliers and grocers have all faced the threat of expensive litigation from patent trolls.
The core of the problem is that patent trolls often purchase patents that are near expiration and attempt to expand the reach of the issued patent far beyond their original scope. Companies have been sued for having drop down menus, shopping cart features, or store locators on their websites. Many of these patents date back to the 1980’s and 1990’s and have had multiple owners with minimal or no continuing involvement of the actual inventor. Currently, there is little downside to the patent trolls filing a lawsuit and that is why this legislation is so important.
The Innovation Act is a strong step forward that will protect businesses large and small from frivolous patent lawsuits that are a drain on industry and a tax on innovation. The bill includes a number of key reforms that will close the loopholes that allow patent trolls to thrive. If passed, the proposed bill would make it so that patent infringement lawsuits could only be brought in judicial districts where either party has an established presence – an important element, as patent trolls are known to seek out judicial districts where they feel they have a higher likelihood of success. It would protect innocent customers by ensuring claims between a patent owner and a manufacturer proceed before claims between the patent owner and the manufacturer’s end users. The bill would further instruct the courts to develop rules and procedures to reign in the out of control discovery costs that patent trolls use to force unwarranted settlements from innocent defendants. It would also require that a losing party who brings a frivolous case pay the other side’s attorneys’ fees. Finally, in accordance with Chairman Goodlatte’s statements during markup, we would hope that it would include a pleadings section that requires plaintiffs to plead each claim of those patents that they say is infringed.
Taken together, these reforms would have a significant positive impact on businesses. Abuses by patent trolls have created a climate of fear that discourages risk taking and expanded economic growth. This is why we support the Innovation Act, which will protect businesses and foster innovation in Oregon. (attachment)
Department of Labor (DOL) – Fiduciary Ruling
North Clackamas Chamber is opposing a recent proposal from the United States Department of Labor (DOL) that would have a detrimental impact on retirement savings for Oregonians and Americans throughout the country.
Our Chamber’s mission is to support and represent businesses in Clackamas County by serving as its advocate on business issues. We are deeply focused on public policy and economic development issues. Given the important role that small businesses play in our state; we feel it is important to oppose these DOL rules that will place restrictions on the financial advice available to small businesses wishing to provide their employees with retirement options. We ask that you will work to fix these rules and prevent unintended, negative consequences.
There is widespread concern that these restrictions will directly translate into the diminished availability of retirement investment advice for small businesses and their employees. This is particularly concerning given that the DOL rule is designed to help small savers and keep investors’ best interest in mind. Experts who have studied it suggest the employees of small businesses (aka small savers) could lose access to benefits they can affordably receive today. Essentially, this ruling would have the opposite effect than intended.
Letters have already been sent to our Congressional delegates as to our stance on this proposal in hopes that we can block such a ruling from moving forward. (attachment)