A10
Region & State
Blue Mountain Eagle
Wednesday, December 2, 2015
‘B’ corps wince at possible tax exemption
By Hillary Borrud
Capital Bureau
SALEM — Companies that
would be exempt from a pro-
posed corporate gross receipts
tax say the exemption could
undermine the reputation of a
movement to encourage envi-
ronmentally and socially re-
sponsible businesses.
The union-backed tax mea-
sure planned for the 2016 bal-
lot would require certain cor-
porations to pay a 2.5 percent
tax on sales in Oregon greater
than $25 million. The measure
exempts companies registered
with the state as ³bene¿t com-
panies.”
Legislation passed in 2013
allows corporations to register
with the state as ³bene¿t com-
panies” in order to put share-
holders on notice that the com-
pany will not only seek pro¿ts,
but will also pursue other goals
such as sustainability. These
companies are supposed to
work with a third party, such
as the certi¿cation nonpro¿t
B Lab, to assess their opera-
tions, and then document posi-
tive impacts in annual reports.
Registering for the corporate
status currently does not affect
companies’ Oregon tax bills.
The proposed tax exemp-
tion generated concern among
some proponents of the bene¿t
company model, who said it
could damage the program’s
reputation if the designation
becomes popular as a strategy
to avoid taxes.
“The B corporation move-
ment is about having socially
responsible companies, not
getting tax breaks,” said Tom
Kelly, president and owner of
the remodeling and custom
home construction company
Neil Kelly. Neil Kelly is a reg-
istered bene¿t company, and
Kelly said the exemption could
impact “the B corp brand.”
“It certainly has the poten-
tial to attract companies that
will become B corporations
whose only intention is to get
a tax break, which will dilute
the value of the B corp move-
ment pretty signi¿cantly,” Kel-
ly said.
Nik Blosser, CEO of Celilo
Group Media and chair of the
board at Sokol Blosser winery,
said he is also concerned about
the exemption. Both business-
es are registered bene¿t com-
panies.
“We certainly didn’t be-
come a B corp to get tax bene-
¿ts, and I think that somewhat
undermines the point for B
corps,” said Blosser, who has
not yet taken a position on the
corporate sales tax proposal.
“If the measure passes, I think
we would want to advocate
that the Legislature modify
that part.”
Blosser said the current
lack of enforcement by the
Secretary of State’s Business
Services Division could make
it easy for corporations to reg-
ister as bene¿t companies to
get the tax exemption, without
demonstrating positive so-
cial impacts. “There’s no one
checking to see if you’ve done
that,” Blosser said.
Ben Unger, executive di-
rector of Our Oregon and a
chief petitioner on the tax ini-
tiative, dismissed the idea that
the exemption could provide
a loophole for corporations
looking for ways to avoid the
corporate sales tax.
“I don’t think we are,” Un-
ger said. “I guess my point is
there’s nothing that’s going to
stop large, global corporations
from avoiding taxes.”
Unger said Our Oregon
included the exemption in the
proposed measure to distin-
guish between huge multina-
tional companies that avoid
taxes and companies that are
“doing their best to be a good
corporate citizen.”
“U.S. corporations are hid-
ing $2.1 trillion oversees that
they owe taxes on in the U.S.,”
Unger said. “But there’s a dif-
ference between those folks,
those corporate boardrooms,
and the small businesses in
Oregon that fuel our economy
and hire our employees.”
Our Oregon is gathering
the necessary 88,184 signa-
tures ahead of a July deadline
to get the measure on the No-
vember ballot.
State Rep. Phil Barnhart,
D-Eugene, said he supports
the tax measure, even though
lawmakers who passed the law
to create bene¿t companies
did not intend to create a tax
bene¿t. “Most of the compa-
nies I’ve heard from, or we’ve
heard from collectively, were
not asking for a tax bene¿t,”
Barnhart said. “They were try-
ing to deal with this other is-
sue, which is making sure that
stockholders know that when
you buy shares in this compa-
ny, they’re going to be trying
to do some other things in ad-
dition to trying to make you
money.”
Barnhart said it is not yet
clear corporations would reg-
ister as bene¿t companies to
avoid the tax, but “I can assure
you that if it matters, we will
be acting on it, probably in
(2017) is my guess.”
There are currently more
than 700 corporations regis-
tered as bene¿t companies in
Oregon, according to a state
database. However, the state
has not tracked the amount of
taxes paid by these compa-
nies, nor analyzed whether the
bene¿t company exemption
would cut into anticipated tax
revenue.
The Legislative Revenue
Of¿ce has estimated the tax
could generate $2.6 billion an-
nually.
Robert Manicke, a lawyer
at Stoel Rives LLP who spe-
cializes in state and local tax
law, said companies that sell
high volumes of items with
low pro¿t margins such as gro-
cery stores “would be affected
strongly” by the tax plan.
Oregon is home to New
Seasons Market, the ¿rst gro-
cery store chain to be certi¿ed
as a “B Corp” by B Lab. Al-
though the company has al-
ready done much of the work
necessary to qualify as a “ben-
e¿t company” in Oregon, the
grocer has not registered with
the state to become one. Staff
were unavailable to comment
Wednesday, due to the Thanks-
giving shopping rush.
Calls to government waste hotline at a ¿ve-year high
waste, fraud and abuse hotline
than in any of the previous ¿ve
years.
As of Nov. 10, the agency
had received 235 complaints,
according to audit manager V.
Dale Bond at the Secretary of
By Hillary Borrud
Capital Bureau
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SALEM — The Oregon
Secretary of State’s Of¿ce is on
track to receive more complaints
this year to the government
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plaints, but the highest number
of complaints in the last ¿ve
years was 184 complaints in
2010, according to an email
from Bond. The lowest number
of complaints during that period
was 145 complaints in 2012.
Molly Woon, a spokeswom-
an for the Secretary of State’s
Of¿ce, said employees believe
the increase in complaints to
the hotline might be connected
to Gov. Kate Brown’s message
to state employees in March,
in which the governor asked
employees to speak up if they
observe problems. Brown in-
cluded a link to the web page for
the government waste, fraud and
abuse hotline.
“We think this is at least in
part due to the Governor’s intro-
ductory email to state employees
in March ... and her highlighting
the hotline program in her new
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role,” Woon wrote in an email.
In her message to employees
in March, Brown highlighted
the response of employees at the
state data center who questioned
a request from a staffer in former
Gov. John Kitzhaber’s of¿ce to
delete Kitzhaber’s emails.
“I believe the staff members
at (Department of Administra-
tive Services) who were not
comfortable with what they be-
lieved they were being asked to
do by Gov. Kitzhaber’s of¿ce
responded correctly by notify-
ing their supervisors, and the
agency’s decision to suspend
further action was appropriate,”
Brown wrote. “I appreciate the
good judgment these individuals
demonstrated as well as the in-
vestigative work that is bringing
important information regarding
these events to light.”
Statistics on the outcomes of
the complaints were not avail-
able on Wednesday, but they can
vary widely depending upon the
incident.
For example, a 2014 com-
plaint that Oregon Parks and
Recreation Department employ-
ees had not properly recorded
work absences was referred to
the parks department for an in-
ternal investigation. The inquiry
revealed that two employees
speci¿cally identi¿ed in the
complaint — HR director Tasha
Petersen and HR analyst Susan
Kirschenmann — had record-
ed on their timesheets that they
worked hours when they were
actually out of the of¿ce for va-
cation or sick leave.
Earlier this year, a complaint
to the hotline prompted auditors
at the Secretary of State’s Of¿ce
to investigate the Department
of Energy’s handling of renew-
able energy and ef¿ciency tax
credits. Auditors ultimately
concluded that the Department
of Energy never publicized a
2012 decision to allow people to
ignore price regulations on the
sale of energy tax credits, so few
¿nance ¿rms knew they could
negotiate such deals. Brown re-
sponded to the ¿ndings by call-
ing for a review of the Depart-
ment of Energy.
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541-575-1063
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