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Covering Dallas, Monmouth, Independence, Falls City and surrounding areas since 1868
Sandy Teal, co-owner of the Dallas Radio Shack, admits to being nervous about a pending conversation with the tax adviser because Measure 67 is retroactive.
POLK COUNTY -- Sandy Teal said the passage of Measures 66 and 67, especially the latter, is prompting her to file her taxes earlier than normal this year, to find out what the provisions will do to her business.
"But I'm nervous about that conversation with the accountant," said Teal, who has co-owned Radio Shack in Dallas with her husband, Tony, for 15 years.
"Mostly, because 67 is retroactive," she continued. "That's the part that's scary ... I didn't plan for this last year."
Teal said she believes her store's sales are strong enough that she won't have to lay off employees. Then again, the true impact won't be known until her fiscal year ends in March, she said.
Many local business owners are sharing that same sort of "wait and see" approach in the wake of Measure 67's approval last week by Oregon voters before making any changes to their respective operations.
Kathy Woodin, owner of Dallas-based Dale Woodin Concrete, said she knows she'll take a hit.
She operates as a C-corporation and paid the old $10 minimum corporate tax last year, reserved for entities without taxable income.
Woodin said after a job with the Oregon State Hospital last winter, contracts since have "been really spotty." She's had to cut loose a full-time crew and hire from a pool of individuals on a per-job basis.
Kim Moore, who co-owns DC Electric with her husband, Justin, declined to reveal what 2009 sales would be for their electric business. But she knows her taxes will far exceed the $150 minimum.
"I would be happy if it was that," she said.
Moore mirrored the complaints of others in saying retroactive taxes presented a major short-term difficulty.
"A business can't go back and charge customers for that," she said. "If we put out bids in January, we can't go back and say 'sorry, we have to add this amount.'"
While the tax increases might not seem high on the surface, a minimum tax based on gross sales or higher profit tax could devastate businesses with high volume sales and low profit margins, said Paul Marsell, co-owner of Dallas Market.
"In the grocery business, our profit margin is less than 1 percent," he said.
Hypothetically, "if our taxes went up by a (few thousand), that would put us out of business," he said.
Marsell said he believes Measure 67 won't "shake out" like supporters hope it will. He envisions many C-corporation businesses switching their filing status to S-corporations.
S-corps will only have to pay the $150 minimum, and it would pass its profits through to the individual tax returns of its shareholders for actual taxation.
"And we've talked to our lawyer," Marsell continued. "We believe there's going to be a class-action lawsuit."
Teal, who's also a Dallas School Board member, said passing the increased profit taxes along to customers isn't an option. Even if she wanted to, her store price hikes must come from Radio Shack's national headquarters.
Tony Teal said carrying less in-store inventory is a possibility, though that ends up hurting his vendors who are based in Oregon.
"Their prices will have to go up to offset the cost of the taxes," he said, "so it will benefit us to go out of state where this tax isn't being done to buy our products ... we can buy them cheaper.
"It's like dropping a pebble in a lake, a ripple effect," Teal said. "It's going to affect everybody we buy from and deal with."
