By Alan Olsen
Olsen, a Republican, represents Senate District 20 (Canby) in the Oregon Senate.
I am a general contractor and small business owner and have specialized in building homes and structures across Oregon. As a general contractor, I have built a business and created many jobs in our community. I have been owner and operator of Custom Construction Services since 1987, specializing in the design and construction of custom homes and commercial projects.
Now as your state senator, elected in November 2010, I am putting my experience of rebuilding homes to work on rebuilding Oregon.
The 2019 legislative session has been rife with bad bills that hurt Oregonians. In early May, Senate Republicans stood up for Oregon voters by walking out of the Legislature to protest HB 3427, a gross receipts tax disguised as an education bill. Oregon voters had voted down such a tax on sales when it was on the ballot as Measure 97. Ultimately, HB 3427 passed on a party line vote.
The legislation is alarming for a myriad of reasons. Number one, the funds from the gross receipts tax are not dedicated to funding K-12 education by constitutional amendment, meaning the Democratic majority can spend it however they choose. Because it’s a statutory law, it is not guaranteed to education or K-12 programs like the Democrats have promised. Additionally, this tax will absolutely devastate Oregonians with fixed incomes, such as the poor and elderly – the very populations Democrats claim to represent – because consumers are paying for the sales tax every time something is purchased. This tax compounds every time there is a sale in the supply chain.
As a general contractor by trade, I understand the true repercussions of this gross receipts tax. While every Oregon household will lose money, the tax will also negatively impact affordable housing initiatives the Democratic party advocates for.
Gross receipts taxes result in tax pyramiding or the process of taxes stacking on top of other taxes as goods are refined in the structure of production. While grocery stores are exempt from the tax, one important detail many fail to recognize is groceries don’t magically appear on shelves. There is a supply chain before that and entities in that supply chain are taxed.
Imagine a supply chain as a set of ascending stairs. At each step, a company sells its product to the next company up the staircase but adds to its prices to cover the new tax on its sales. The costs compound with each new step with the consumer ultimately paying for it all in the final item. The below example includes some of the entities involved in building a home, all of whom are taxed and will raise their prices to recover the cost of the new tax.
Tax 1: The company producing timber will be subject to the tax
Tax 2: The construction companies purchasing the timber will be subject to the tax
Tax 3: Contractors, designers and specialists will be taxed.
Oregonians will pay Tax 1, 2 and 3. Every item in your house will be subject to these incremental tax increases built into the price of carpeting, windows and roofing. How can housing be affordable when all the costs increase substantially?
Oregon deserves better.