Oregon State Senator Mark Hass wants to tax the small businesses and entrepreneurs of Oregon – even if these businesses lose money and earn no profits. A $1.6 billion gross receipts tax would be the largest tax hike in state history. It's bad policy, and it's being spearheaded by a state senator who, by his own admission, has conflicts of interest.
Hass declared six ‘potential’ conflicts of interest on his legislative votes (2010-2016). Our organization at OpenTheBooks.com investigated the claims and found these conflicts all too real.
Consider one of Hass's self-admitted conflicts of interest that involves legislative votes, employment at a private-sector public relations firm, PR contracts with a state agency, and payments to his PR firm from his state senate re-election campaign.
In addition to serving as a state senator, Hass works as an advertising executive for Cappelli Miles – a Portland-based public relations firm. Cappelli Miles helped re-elect Hass to the state senate. The Oregonian found
$3,530 in "web-design" payments to Cappelli Miles from the Hass campaign account (It’s Legal, But is it Ethical?
The Oregon Forest Resources Institute (OFRI), a small state agency, paid $1.1 million
to Cappelli Miles last year at a billing rate of $150 per hour. In 2013, on legislation relating to the OFRI and the forest products harvest tax (HB2051), Hass waited until after
the vote to declare his "potential conflict of interest." Two years later, when a similar bill hit the floor, Hass didn't declare a conflict at all. This bill (HB2455) didn’t mention OFRI explicitly, but increased
the forest products harvest tax on the timber industry and membership served by OFRI.
Hass's conflict of interest with OFRI isn’t going away. A competitively-bid $4.75 million five-year state contract between OFRI and Cappelli Miles (2011) morphed into
a $12.65 million contract running through 2021 – without competition. A clause in the contract allows for another five-year extension through 2026. Hass helped
design advertising strategy and marketing for OFRI.
This isn't the only time Hass tangled his PR work with senate legislation. Hass was the chief sponsor allowing
beverage distributors to establish distributor cooperatives (2012). Hass declared a ‘potential conflict’: Cappelli Miles did business
with The Oregon Beverage Recycling Coop (OBRC) – a cooperative corporation owned by Oregon beverage distributors. OBRC also gave Hass $2,000 in campaign cash (2012-2013). This set of entanglements didn't stop Hass from carrying the legislation.
All of these transactions – at arm’s length – might be legal, but the pattern is certainly troubling (no quid-pro-quo is alleged or implied). Hass has blurred all the lines between private employment and public business. In response to our request for comment, Hass said:
Oregon has a citizen's legislature, where members serve part-time. Like many of my colleagues, I also work for a private employer when the legislature is not in session. Sometimes our employers do business or have relationships with organizations affected by indirect or direct legislative actions.
When this occurs our ethics laws require us to state a potential conflict of interest. So, I try to make disclosures at the appropriate times in the legislature, usually before a vote is taken.
I think a legislature composed of people with real jobs in the real world make for a more grounded and centered organization. I’ve joked that there should be a rule that all legislators must have outside jobs or own businesses, and that they must have kids in public schools.
Now, Hass is promoting the largest tax hike in state history. It’s a particularly onerous tax on the job creating, small business entrepreneurial economic engine of Oregon.
Under Hass's tax, Oregon's small businesses owners face double taxation – first on their sales to Oregonians
and again when they pay personal income taxes. Published in the Oregonian, Stayce Blume argued the tax would cost her family business – The Skyland Pub in Troutdale – an additional $7,000 per year.
"This tax would eat the equivalent of eight days of our small restaurant's revenue," Blume wrote. "By strapping us down with additional taxes, in a business that doesn't have big margins to begin with, it makes it difficult for us to keep our prices at a point that are reasonable to our customers."
Even in Illinois, with both chambers loaded with Democratic supermajorities, a similar tax was unanimously rejected - for many of the same reasons articulated by Ms. Blume. When former Illinois Governor Rod Blagojevich proposed
a gross tax receipt bill in the Illinois House of Representatives in 2010, not a single representative voted
in favor of a resolution asking if Illinois should adopt the tax. The bill was rejected 107-0.
In November 2016, Oregonians overwhelmingly rejected a similar tax at the ballot box. Citizens should think twice about Sen. Mark Hass and his ill-conceived gross receipts tax.
Adam Andrzejewski (say: And-G-F-Ski) is the founder and Chief Executive Officer of OpenTheBooks.com – a database containing 3.5 billion captured spending transactions from federal, state and local governments across America.