A tale of two taxes
Sunday, September 4, 2011
Give a business a $1 million break on taxes and fees: Good idea or bad?
It depends on the business, the types of taxes we’re talking about, and how we tell the story, to look at two recent local examples.
In July, developer Elie Kassab asked for a property tax break that will save him $1.1 million over the next 25 years. He said he’d like to pay taxes on the land he’s developing and the ground-floor stores of offices at the base of his two proposed four-story buildings. But to make the 92 apartment units pencil out, he asked for a 12-year break on paying property tax on that part of the project, which he plans to build on the site of downtown Vancouver’s Burgerville.
Even though other developers have received tax abatements to build downtown, readers cried foul.
“If he cannot make it pencil out, then why build it?” Robert Winslow commented on the Web version of the story.
“The city of Vancouver is constantly giving the store away,” commented Harold Olson.
Judging by the outcry, you’d think local folks just love taxing businesses here in Clark County. But another recent story proves that wrong.
When owner of Vancouver-based Chuck’s Produce and Street Market complained about a nearly $1 million traffic fee the county said he’d have to pay to develop a second store, readers agreed — don’t make this man pay the fee.
“Sounds like extortion to me,” wrote Mark Simpson.
“Clark County needs to release its stranglehold on business if we are to ever get out of a recession,” Aaron Potter followed up.
On one level, I can understand why readers had such different reactions to these two different $1 million taxes.
Any of us who own homes are familiar with property taxes, which fund local schools, fire stations, municipal government and the state. It may not seem fair that we have to keep paying at the same rate if a deep-pocketed businessman can get away with paying less — even if he gets a tax break as a reward for development the city desperately wants to spur.
Traffic impact fees, on the other hand, seem like a foreign concept to folks not steeped in the arcana of development. They are charged on new construction to help pay for the roads to new developments, or to pay for repaving, due to additional wear and tear from increased traffic. That means that if you’ve bought a new house any time recently, you did pay a traffic impact fee — it was built into the price the builder charged you.
A $1 million fee may seem large, but it’s not unheard of in Clark County. Bowyer Marketplace, home to a new WinCo at Northeast 119th Street and state Highway 503, had a $2.3 million fee. The full plans for the proposed 20-building Padden Employment Center would generate $8.4 million in traffic fees.
These aren’t arbitrary tax assessments — they’re based on research by the Institute of Transportation Engineers into the wear and tear new projects create on local roads.
There’s no doubt that at times taxes on businesses are too high, and at times they’re too low. But perhaps we should all take a deep breath and think about why a tax is charged or waived before we get up in arms.
Courtney Sherwood is The Columbian’s business and features editor. Reach her at 360-735-4561 or firstname.lastname@example.org.