When Bart Phillips looked out his downtown Vancouver office window on Wednesday morning, he did not see a traffic jam of Oregonians trying to escape their state’s newly voter-approved tax measures. But that doesn’t mean the yes votes on Measures 66 and 67 Tuesday won’t have a positive impact on economic development in Clark County and Southwest Washington.
“We’ve operated with the assumption that for certain (Oregon) businesses there are some compelling reasons for being in the Washington portion of the metro area,” said Phillips, president of the Columbia River Economic Development Council in Vancouver. “My assumption is that with the new taxes that would increase.”
The measures levy new taxes on Oregon’s wealthy individuals and on businesses. Individuals earning $125,000 a year will see their tax rate increase from 9 percent to 10.8 percent of their income and up to 11 percent, if they earn $250,000 or more.
For small companies, the hit is greater. For example, under the new measures, Oregon firms with annual gross revenue of $5 million will pay a minimum tax of $4,000. That’s on gross sales, not profit, pointed out Lisa Goecke, a certified public accountant, shareholder with Perkins & Co. accounting firm in Portland and CREDC board member.
“We see the impact being greatest on small businesses and individuals who may already have been on the fence about what state to be in,” said Goecke, who lives in Ridgefield. “This may be the tipping point for them. I know a lot of us are fielding a lot of calls from clients today.”
Brian Sullivan, a commercial real estate agent with Coldwell Banker Commercial Bob Bernhardt in Vancouver, said the Oregon taxes will give “Washington an excellent opportunity to shine.”
His firm, which specializes in brokering leases and sales of commercial and industrial property in Southwest Washington, expects to start direct marketing to businesses that might be interested in migrating north.
“Oregon expects to raise $727 million from these taxes,” Sullivan said. “That’s a major number. I’ve already received one call this morning (from a potential client).”
Ultimately, said Phillips, the tax profile is only one consideration by a company that might be planning to relocate or expand to Washington, and the factors vary from business to business.
“For some businesses this has huge implications where they could be paying taxes into the six figures,” Phillips said. “But really it’s a zero sum game because at one level we need to be growing jobs for the region. Taking jobs from Portland doesn’t really raise the tide for the area. Instead we need to focus on (job recruiting) outside the region and outside the U.S.,” he said.
Realtors see opportunity
Clark County home seller Mike Lamb expects the number of migrating Oregonians to surge in the coming months, as 66 and 67 take effect.
“We’ll see a significant number of people moving to Clark County as a result of this election,” said Lamb, an associate broker with Windermere Real Estate Stellar Group in Vancouver.
Lamb compared Oregon’s new initiatives to the state’s Measure 5 property tax limitation initiative that passed in 1990 and caused huge budget restraints on public school funding.
“That’s when we saw a wave of people moving to Clark County,” Lamb said.
The movement launched a decadelong period of increased home-building activity, as record numbers of newcomers, mainly Oregonians, relocated to new Clark County neighborhoods.
Others foresee a similar scene in the works now, which could boost languishing home sales.
Oregon’s new tax climate could go a long way to improve things here, said Terrie Cox, a Remax Equity Group Realtor who markets and sells high-end homes in Washington and Oregon.
“I don’t think it’s going to take a marketing campaign for Portland business people to figure out the bottom line of where they need to live for financial reasons,” said Cox, who has noticed a surge in Oregon clients over the past two months.
Vancouver Realtor Nathan Cano also expects Oregon’s tax measures to attract more homebuyers here. Cano sells homes that range in price from $60,000 to $2 million.
And he anticipates more Portland-area businesses will relocate their operations to Clark County, followed by their employees, who will then qualify to buy more expensive homes.
“Moving to Vancouver will raise people’s incomes because they won’t have to pay the (Oregon) state tax,” thereby boosting their loan potential, Cano said.
Lamb said he expects an 18-month to two-year surge in Clark County home sales and building activity because of the voter-approved initiatives.
“There is always a reaction, and I expect there will be this time too,” he said.