The Scary, Scary Portland Business Tax

Four people. That’s all it took to generate a front-page story by Jim Redden in the Portland Tribune on how small businesses are abused by the Portland-Multnomah County Business Income Tax (BIT). Well, that and a coordinated effort by the owner of the company that employed those four people, David Lister (a possible challenger to City Councilman Eric Sten and darling of Jack Bog) and the Cascade Policy Institute.

Redden’s article says Lister claims that the $3,600 in BIT he paid last year was a “major reason for the move” from a building he owned on NE 33rd and Knott to SW Greenburg Road in Tigard. He’s quoted as saying the difference between Portland taxes and his $55 Tigard business license will make three monthly payments on his new building (i.e. $1,200/month).

I’ve been a sole proprietor with a business license in Portland for over a decade myself. I, too, do software development. And as someone who works with numbers, a couple of things don’t add up for me.

Near the end of the Redden article, Lister and his partner are described as wanting a larger office building. In the same section, the article states they bought their NE Portland office sometime after a lease taken out in 1987 expired. Call me cynical, but even prices for office buildings in Portland have gone up a little in the last 15 years. The price difference between a commercial property in Portland and something of a similar size in Tigard could make that $3,600 look like chump change.

Old Office / New Office

Another thing that struck me is that Lister’s new office is just shy of 12 miles from his old office, according to Mapquest. They’re not easy miles during rush hour, either. The direct way involves a stretch of I5. Any route has to cross a bridge. I don’t have any idea where in the city Lister lives (if he’s planning to run for City Council, he has to live in Portland), but if he’s living in SW Portland, Tigard’s going to be a lot closer to his own home than his old location, which might have had a fair amount of sway (I say that as someone who’s recently begun commuting to Vancouver every day). On the other hand, if he lives somewhere near his former office, making a round trip of 24 miles would use up about a gallon of gas in a car with better mileage than your standard SUV. Do that 5 times a week for 48 weeks of the year and pay $2.50/gallon and you’re out $600 — a significant chunk of that $3,600 savings. Adjust up or down for your make and model. Depending on where he and his employees live, he could just be shifting a significant portion of his BIT to gasoline. On the other hand, if they’re all closer to the new location, I can see why that wouldn’t have been mentioned in the article since it would have detracted from the story of how taxes drove him out of the city.

Finally, how significant is it that a 4-person company moved out of the city? How did that rate a front-page story in the Tribune? Couldn’t the Tribune find anyone else who made the same claim as David Lister? Because Lister seems to have gotten an awful lot of press with the Tribune, despite running a pretty small company. In March 2004, he was quoted in an article on workplace profanity. In August 2005 in an article on Sten (also by Redden). In an article from last November on the election of Mayor Tom Potter. In August 2004 on the Portland Development Commission. He’s not any small businessman who decided he couldn’t afford to or didn’t want to pay what he viewed as an unfair tax, he’s an activist against the BIT. He’s thinking of running for public office (although his plan to move his business out of the city is about as good a way of getting elected as a presidential candidate moving his own business to the Cayman Islands). He’s the only person Jim Redden could find to interview on this topic? And he didn’t ask some very basic questions about real estate and commuting? That just doesn’t add up.