Revenue generating measures 66 and 67 apparently haven't hurt Oregon business. Medfordís Lithia Commons construction indicates Lithia Motors commitment to Oregon. Bob Pennell / Mail Tribune photo - Bob Pennell


Some businesses may be smarting from the passage of two tax measures in 2010, but dire predictions of company failures and a mass corporate exodus from Oregon haven't materialized.

Lithia Motors Chairman Sid DeBoer said he hasn't heard of any business seriously considering leaving the state because of the passage of measures 66 and 67. A local economic development specialist said he was unaware of any business closing as a result of the vote.

"I don't think 66 or 67 tipped anybody to go," DeBoer said.

Measure 66 increased taxes for households with incomes of more than $250,000 and singles earning more than $125,000. Measure 67 increased the corporate minimum tax from $10 to $150 for S-corporations, LLCs and LLPs, and increased taxes on profits and gross sales for C-corporations.

When the measures passed, opponents such as Rep. Sal Esquivel, R-Medford, said it would push many businesses over the edge.

But this week, no one contacted could produce the name of a business that had left the state or closed because of the taxes. Several businesses cited as victims of the measures were either still operating or blamed other factors for their closing.

DeBoer said Oregon has much larger issues than measures 66 and 67.

"Our problems in the state are the personal income tax and the estate tax," he said. "If you had a big estate that you owned, why would you live here?"

Lithia's commitment to staying in Oregon is on display in Medford, where it's building a four-story corporate headquarters on Riverside Avenue at Sixth Street.

DeBoer, who has auto dealerships in 12 states, said Oregon is neither the worst nor the best state in which to do business.

"Washington taxes you whether you make money or not," he said. "Texas is our most business-friendly state."

He said Oregon should change its tax structure to make it more equitable, but doubted that change would be politically possible.

The measures are still sharply criticized by many in the business community.

"It was a horrible statement to make in this state," said Alan DeBoer, who owns several auto dealerships locally and is Sid DeBoer's brother. "It's like having a giant advertising message that says 'Don't do business in Oregon.' "

To avoid paying the extra taxes, DeBoer said he changed the corporate structure of Town and Country Chevrolet. Initially, the change was expensive — $60,000 — but DeBoer said it will mean he can shave $20,000 off his state taxes annually.

"The bottom line is the state lost revenue with our personal example," he said.

One business owner who complained vigorously about the two measures threatened to take his business out of the state, but still operates here.

Bruce Hough, president and chief executive officer of Medford-based ComNet Marketing Group, started Impact Marketing Inc. in Reno, Nev. on July 2, 2010 with $750 in capital, according to the Nevada Secretary of State's Office.

Hough declined to discuss the specifics of his Nevada operations, but the company appears to have only a mailing address at this point.

One of the listed directors for Impact Marketing in Nevada is Esquivel, who opposed the two measures and works at Hough's Medford operation.

Hough said his new venture will take time to develop and eventually will require hiring managers and others from outside of Oregon.

The effects of Measure 66 and 67 may not be felt immediately in the state, Hough said, but he believes many businesses will be planning to move out in the future.

"This is the thing about business," he said. "We do long-term planning."

Hough said he will continue to keep a presence in Oregon, although he may move much of the operation into Nevada eventually because of what he views as anti-business sentiment in Oregon.

"I'm getting hosed," he said. "Why should I stay here?"

While some business leaders say the fallout from the two measures could take time to play out, so far there is no hard evidence to conclude businesses are turned off by Oregon.

"There's been absolutely no stampede out of the state," said Rep. Peter Buckley, D-Ashland. "All the dire warnings at the time proved false."

The state estimated the taxes would generate $730 million for 2009, but Buckley said the amount came in at closer to $630 million in the 2009-11 biennial budget. Despite the drop, it was money that helped prevent additional cuts in education, public safety and social services, he said.

A University of Nebraska study released in August concluded Oregon ranked fifth in the nation for small business growth based on a per capita basis.

That came despite results of a study by the Small Business and Entrepreneurship Council ranking Oregon 39th in the nation in 2010 based on the state's tax structure and health care policy.

Esquivel said the expansion effort for Impact Marketing into Nevada will take time, and noted he wasn't actively involved in that venture yet.

"I didn't set the company up," he said. "Bruce set the company up. It's crawling now. We've got to get it to where it can walk, then to the point where it can run."

Esquivel said measures 66 and 67 pushed marginal businesses over the edge, saying he calculated some three dozen companies went out of business, mostly in the Salem and Portland area.

Despite emails Esquivel received about businesses shutting their doors, further inquiries into some of these businesses didn't support the idea the two measures were the main reason for the closures.

Basco's Burgers in Cornelius shut its doors last year and Esquivel received an email that Measure 67 was the cause. However, the Hillsboro Argus ran a story Feb. 11, 2010 on the closure in which the owner of Basco's made no mention of Measure 67 but rather cited factors including the recession and road construction.

The owner of Little Italy, another restaurant in Cornelius, threatened to close due to the impact of Measure 67. The business was open on Wednesday with the same owner in charge.

Another business owner, Lona Frank of ALPACAS of Tualatin Valley, said the two measures hurt her bottom line, but she cited a long list of economic forces that have undermined her business, leading to layoffs.

"It's not any one of them, but all of them together," she said.

Ron Fox, executive director of Southern Oregon Regional Economic Development Inc., said he's heard plenty of angst over measures 66 and 67, but no reports of business closures.

Fox said the one of the major inequities created by Measure 67 is that it penalized businesses that generated lots of revenues but had a slim profit margin.

He cited the Pendleton Grain Growers who buy and sale grain as part of a cooperative. The growers saw a higher gross receipts tax under Measure 67.

"That seemed to me to be one of the things the Legislature didn't adequately address," Fox said.

Reach reporter Damian Mann at 541-776-4476, or e-mail

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