The Mayor of Oregon’s largest city delivered her annual State of the City address last Friday. The disconnect between her vision for economic development and the business climate reality was palpable.
Mayor Katz’ “new” economic development strategy calls for Portland to “become the most creative and innovative city in America.” Unfortunately, Portland area governments are already too creative and too innovative in ways that harm local business.
Local land use and business regulations make it difficult to site or expand businesses. The city/county business license fee and income tax structure (known as the BIT system) is already onerous to many firms, and is scheduled to become even more so to help fund a public school system that is not the responsibility of those governments.
After her address, the Mayor admitted that the current BIT system was a conscious effort to encourage manufacturing firms to locate here. Now that “creativity and innovation” is the new mantra, the tax structure may be revised to penalize manufacturers, transportation, communications and utilities, and reward the financial, retail, wholesale and service sectors.
Business owners trying to reduce their own government burden at the expense of others should be wary. Rather than play government’s win-lose game, all business people should call for reducing the tax burden everyone faces. Lower taxes and fewer regulations are the innovations we need to spur true economic development. Anything less is simply old, failed industrial policy by other names.
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