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  Oregon Business Journal
  P.O. Box 93
  Salem, OR 97308
  (503) 365-9544



Full June 2019 Issue * Salem Weather * Past Issues * About Us * Ad Rates * Contact Us

     

It's Never Enough
Oregon's new tax plan

Anthony K. Smith
Oregon State Director
National Federation of
Independent Business

    Last month, the Oregon Legislature passed the Corporate Activities Tax - a gross receipts tax on business entities (not just corporations) aimed at increasing state spending for public education by more than $1 billion per year.
    Important details of the new tax plan (like the 0.57% rate) were finalized and made public just two days before the bill passed the House on a party-line vote.
    Republican state senators delayed the vote in the Senate by avoiding a week's worth of floor sessions, but in the end, the bill passed the Senate, less than two weeks after the House vote, again on party lines.
    Just three days later, HB 3427 was signed into law by Gov. Kate Brown.
    Barring a successful referral campaign, starting in 2020, Oregon will begin taxing businesses with $1 million or more in Oregon sales, whether they make a profit or not. Companies that make huge profits will pay the tax - so will those that break even. Most egregiously, companies that lose money (like start-ups) will also pay the tax.
    They might even owe the state the same, or more, in new taxes than the company with plentiful profits.
    Oregon's new tax policy completely removes profit from the equation. Ironically, not-for-profit businesses (and other nonprofit organizations) are exempt from the new tax.
    For politicians to take such extreme measures -- to not just raise taxes, but to change the way we tax businesses -- they must not have had any other choice, right?
   
    Why pass a regressive tax that hurts low income families the most when just a few short years ago, voters soundly rejected a gross receipts tax?
    * The state budget must be in bad shape.
    * Tax collections must be sharply down.
    * We must have been facing massive cuts to key public services.

    Wrong. The funds generated by the new Corporate Activities Tax are earmarked for new public education spending. New spending - not budget hole filling.
    And if you're in the business of advocating for increased state spending on education, or anything else for that matter, it's a very good thing that the Legislature passed HB 3427 when it did.
    Two days after the bill passed in the Senate - the day before Gov. Kate Brown signed it, state economists from Oregon's Office of Economic Analysis presented the quarterly revenue forecast to members of the Legislature's revenue committees. Every forecast is critical to understanding the financial situation of the state, but the May forecast (in odd-numbered years) is especially important because those revenue projections help build the state's next two-year budget.
    Let's rewind for a moment - we're nearing the end of the 2017-2019 biennium.
    The original 17-19 close of session (COS) projection for net general fund and lottery resources was about $21.4 billion. Fast forward back to today, the May 2019 forecast shows that the state is now expected to bring in a total of $23.8 billion!
    That's $2.4 billion more than was expected. When asked what happened, the state economists attributed the sharp increase to the federal Tax Cuts & Jobs Act of 2017.
    Luckily for taxpayers (and woe to taxand- spenders) $1.4 billion is now headed back into their pockets because of Oregon's Kicker law. When revenues exceed 2% of what's expected to come in, personal income tax filers receive a credit toward their next-year's state income tax liability. That $1.4 billion figure translates to about 7.6% above original COS projection for the end of the 17-19 biennium - way above the 2% threshold that "kicks" the kicker.
    However, that wasn't the only big news from the May revenue forecast. Not only will Oregonians receive the largest kicker in history, but the state is now projected to have more than $700 million in additional revenue available for the upcoming 19-21 biennium. Since this announcement, the Capitol has been abuzz with lobbyists trying to score that "new money" for their favorite causes.
    The bottom line is Oregon has never brought in more tax revenue than it's currently bringing in - and that was before the addition of the Corporate Activities Tax's billions. Will it be enough? No, it's never enough. The calls for higher taxes and increased spending will start up again very soon in Salem, if they haven't started already.
    Anthony K. Smith is Oregon state director for the National Federation of Independent Business.
   


Junkyard Rides Food Channel Fame
Into the Franchise Arena


    When Guy Fieri and his Diners Drive Ins and Dives Crew pulled into Lancaster Oregon, Population 20, he wasn"t disappointed, what he found was an Urban Legend. Founders Craig and Kim created a menu and experience that lead Guy to say in conversation, "You might want to consider a Multiple Location Operation or Franchising this Concept! Several years later JunkYard Extreme Burgers and Brats, is proud to announce the Franchising of the business. Most days in Lancaster, motorist race by at 60 miles per hour and catch a glimpse of people standing in line at the ridiculously, themed restaurant with an airplane on the roof. Junkyard does not advertise because customers do it for them. A Junkyard is a billboard on its own and to this day the Food Channel reruns the episode almost every month worldwide. You build it they will come.
    Co-founder Craig Zumwalt credits his wife and business partner Kim for the Incredible Menu of Burgers, Brats, Franks, Fries, Fried Cheese Pizza and more. Together they created a methodology that is pinnacle to the JunkYard brand. According to Zumwalt, the beauty of owning a Junkyard Extreme Burgers and Brats is difference with a capital D. It"s the WOW Factor!
    It"s not just one off creations, theme, or decor, moreover its the hundreds upon hundreds of Foodies who tirelessly drive from all parts of the country to declare our idea of a reinvented Burger, Dog, Sausage the BEST they have ever had.
    That makes it worth the 13 years of blood and sweat it took to create this concept. To lead and not follow any other. To create a bar so high all others exist below it.
    In the game of supposed gourmet, burger joints the "Wow Factor" is a rare commodity. Junkyards work best where Junkyards are! No need for downtown leases, buys and builds, or expensive advertising campaigns.
    Out of the fray, a short destination...a place where folks can sit back eat, drink and marvel, as opposed to being led through another cold, checkered floor norm.
    For more information please visit us at www. extremeburgers.com or contact: Lorne Ray Franchise Development Coordinator Phone: 480-370-8908 Email: LorneRay@gmail.com
   



The Estate Plan That You Want
Part 2

Ray Sagner
Financial Columnist

    Last month we opened with the simple observation that everyone has an estate plan, either the one you develop with advisors or the one that through lack of planning the state government has set up for you. We learned that estate planning addresses two important issues: 1) the distribution of your assets, and 2) your care, should you become incapacitated or in poor health. The focus of last month's article was on the basic will, account titling, and beneficiary designations. This month we will explore the Revocable Living Trust.
    A Revocable Living Trust is a legal document created by the 'Grantor', who is either you, or you and your spouse. Living trusts are often used because they may allow assets to be passed to heirs without going through the probate process. Going through probate is often costly (the probate courts, in some states, charge a fee based on a percentage of the net worth of the deceased), time consuming, and public (the probate records are available to the public, while distribution through a trust is private).Unless you are married and pass away residing in a community property state, your property, whether you have a valid will or not, will enter probate. A court having jurisdiction of the decedent's estate supervises probate in order to ensure that the decedent's property is distributed according to the direction of his/her will and/or the laws of the state.
    As the word revocable implies, once the trust is set up it can be amended or replaced by the Grantor during his or her life. The trust becomes irrevocable upon the Grantor's death and cannot be changed. Living trusts also can be utilized to plan for unforeseen circumstances such as incapacity or disability.
    Before we continue with the description of a living trust, let's define the parties to the trust: The Grantor (also called the settlor, trustor, or trust maker) is the person who sets up the trust. An estate planning attorney draws up the documents for the Grantor. The Trustee is the person who will manage the trust assets, and usually in a Living Trust it the same person who set up the trust, since he/she wants to manage his or her own property. The Successor Trustee is the person who will manage the trust assets when the Grantor dies, or in the event the Grantor becomes incapacitated. Upon the Grantor's death, the Successor Trustee has the obligation to distribute the trust's assets according to the Grantor's instructions in the trust instrument but does not have the legal right to change the trust. The Successor Trustee has the duty to manage the assets in the estate and must do so for the benefit of the remainder beneficiaries. At the Grantor's death, the Successor Trustee automatically takes over without court order, pays any debts, expenses and taxes directed to be paid by the terms of the written trust document, and then distributes the property to the trust beneficiaries, be they individuals or institutions.
    To establish a basic living trust, the Grantor signs a document called a declaration of trust. In the document, the Grantor typically names himself/herself as trustee, and transfers assets to that trust. Because the Grantor is named as the trustee, he/ she maintains full control over the assets.
    Every asset that does not have a beneficiary designation should be re-titled in the name of the trust. Several people overlook re-titling many of their assets, like saving accounts, safe deposit boxes and real estate. If you as the Grantor fail to title assets into the trust name, the assets go through probate, one of the things they set out to accomplish.
    Depending on the complexity of the trust, it may be advisable to use a corporate trustee such as a bank or investment company especially for the successor trustee position. Corporate trustees must provide accurate and detailed records of all transactions that take place in the trust for however long the trust exists. And serious thought must be given to naming an individual or family member as the successor trustee as they may not have the skills to do the job necessary, especially when it comes to managing trust property and investments.
    After the Grantor dies, the person identified as successor trustee in the trust document generally assumes that role. The successor trustee transfers ownership of the assets in the trust to the beneficiaries named in the trust document. In many cases, the whole process takes only a few weeks and there are no lawyer or court fees to pay. When all the property has been transferred to the beneficiaries, the living trust terminates. Next month we will finish up our primer on estate planning with the power of attorney, health care directives and planning for incapacity.
More on The Estate Plan That You Want The purpose of this article is to inform our readers about financial planning/life issues. It is not intended, nor should it be used, as a substitute for specific legal, accounting, or financial advice. As advice in these disciplines may only be given in response to inquiries regarding specific situations from a trained professional. The Legacy Group, Ltd