Take a look at Governing.com's ranking of the "seven elections to watch in early 2010," and third on that list is a pair of ballot measures in Oregon. In fact, they're the only ballot measures included in the list -- ranking just behind the Virginia state Senate race representing the wealthy DC-suburbs of Fairfax County, but ahead of the New Orleans mayor's race.
3) Oregon's Tax Measures 66 and 67, January 26 -- Oregon is home to a great tax fight this month, as voters will weigh in on whether to raise income taxes on wealthy individuals (Measure 66) and raise taxes on corporations (Measure 67). The tax increases were approved by the Oregon legislature last year, but are being challenged by a "people's veto," setting up a major showdown over the size of government.
Check Thursday's edition of the Daily Astorian and you read:
Ballots for the Jan. 26 statewide special election on two tax measures will be mailed out Friday to Clatsop County voters. The two ballot measures are the only items on the ballot.
Measure 66 raises taxes on household incomes above $250,000 and individual filers above $125,000 and reduces income taxes on unemployment benefits in 2009. Measure 67 raises the $10 minimum state corporate tax, as well as the business minimum tax and corporate profits tax.
And the voter education guide prints the full but sterile text in black-and-white.
First, Measure 66:
"Yes" vote raises taxes on income at and above $250,000 for households, $125,000 for individual filers. Tax rate increases 1.8 percentage points on amount of taxable income between $250,000 and $500,000, 2 percentage points on amount above $500,000 for households. For individual filers, the rate increases begin at $125,000 and $250,000 respectively. Eliminates income taxes on the first $2,400 of unemployment benefits received in 2009. Raises estimated $472 million to provide funds currently budgeted for education, health care, public safety, other services.
And then, Measure 67:
"Yes" vote raises $10 corporate minimum tax, establishes $150 minimum tax for most businesses or minimum tax of approximately 0.1% of total Oregon revenues for some corporations with over $500,000 in Oregon revenues. Raises tax rate some corporations pay on profits by 1.3 percentage points. Increases certain business filing fees. Raises estimated $255 million to provide funds currently budgeted for education, health care, public safety, other services.
For a little context, read a great item by Adam Sanchez: "In order to make a dent in Oregon's $4 billion budget shortfall, the Oregon legislature passed Measures 66 and 67 to raise $733 million in new revenue from corporations and high-income Oregonians," Sanchez writes. "The two measures passed through the Democratic-controlled Oregon state legislature along with a series of brutal cuts to education, health care and other social services."
So here's the picture. Oregon is suffering like the rest of the nation -- rising unemployment and home losses, a half-million people living below the poverty level, and a 45 percent rise in food-stamp caseload -- but Oregon lawmakers moved to address the problem. Even after using all the stimulus funds available last spring, it found itself with a deep hole in the biennial budget and only two options: Cut services or raise taxes.
And Oregon lawmakers split the baby: They slashed state funding to public services but also adopted a slight -- key word: slight -- tax increase on Oregon's wealthiest citizens and its most successful businesses. Just to be clear, and as the ballot measure language clearly reads, the slight tax increase is targeted like a laser beam toward Oregon's wealthiest individuals and its most successful businesses -- those MOST ABLE to afford the slight increase.
How many Oregonians would be affected by the change? The Source Weekly calculated thusly this week: "Measure 66 would slightly raise the marginal tax rate for the state’s top income earners – individuals making $125,000 a year or more and couples making $250,000 or more. For every other taxpayer – 97% of Oregonians – the tax rate stays unchanged. "
And which business would be affected? The Source answers, "[O]nly a small portion of businesses – Type "C" corporations with sales in Oregon of more than $500,000 a year. The maximum rate they’d pay would be $1.50 per $1,000 in sales." It goes on:
[M]ost of the state’s small businesses would see little or no effect. Sole proprietorships would get no tax increase at all. Partnerships, limited liability partnerships, limited liability corporations and S-corporations would only see their minimum tax rise from the present ridiculous $10 (enacted in 1932) to $150.
Of course, nothing is ever as simple as adopting the best idea under the circumstances. Sides have been drawn, with usual allies on either side. People who provide or use public services -- social workers, nurses, teachers, firefighters, children's advocates, senior citizens and senior-care providers, the poor and unemployed -- are organized to support the measures. And a roster of newspapers has lent their support, alongside regional bloggers. The Cascadia Journal opined on Monday,
This tax will not be a burden at all for any real business in Oregon. For the difference that this will make for the majority of us, the residents of Oregon, the benefit will more than make up for the small amounts of taxes involved.
I really don’t consider this a significant increase in taxes. For the vast majority of Oregon corporations, this is simply an effort to bring the nominal fees up to something that is not so low as to be silly. This measure will bring needed money into the state treasury to support the services that we need, while being an inconvenience to nearly none of us.
Who's against Measures 66 and 67? Obviously the Tea Party crowd opposes it, taking its cues from the corporate interests funding their scheduler, FreedomWorks. One national Teabagger website crowed this week, "If you Tea Party goers in the western U.S. want a specific battle to fight there is none better than ballot measures 66 and 67 in the State of Oregon."
Tally ho.
The Portland business community is against it, but that makes sense: Folks who can afford to contribute a few extra dimes for the good of the state's people -- namely, its kids, its elderly, and everybody who benefits from services like law enforcement, fire safety and emergency medical personnel, not to mention water quality and a host of similar quality-of-life matters -- don't like being required to do so by a tax code.
Some combination of Teabaggers and the Portland corporate elite, maybe, populate a group calling itself Oregonians Against Job-Killing Taxes. (It doesn't make for a cool acronym, but it's a better name than Oregon's Wealthiest Three Percent Recommends Letting The Rest Eat Cake. When I see the title, I imagine cartoonish, squatty little imps with black scars spelling "T-A-X" across their bare lobster-red chests, all carrying hatchets emblazoned "These Machines Kill Jobs!") OAJKT, the group's phonetically-challenged acronym, rated a mention by Steve Duin, columnist for the Oregonian, who wrote last October,
The OAJKT website insists that "the most damaging" tax increase for business would require that a C-corporation with $25 million-$50 million in Oregon sales will now pay a gross sales tax of $30,000.
That's all? Less than one-tenth of 1 percent? For many companies that, for years, have paid the $10 minimum? Who in the world considers that unreasonable?
Silly question, right?
Duin might have checked with his editorial board for the answer before publishing that sentiment. Strangely, the Oregonian redrafted and printed the business community's talking points under the banner of an editorial this week, which caused the Portland Mercury to shake its own head. PM's Matt Davis wrote:
Woah. File under "I did NOT see THIS coming." The Oregonian editorial board penned a lengthy endorsement yesterday advising its readers to vote against the legislature's modest tax hikes on corporations and those earning more than $250,000 a year. The strongly-worded piece, which reads more like a press release put out by the Portland Business Alliance than reasoned opinion...
That editorial reprinted the trope that "businesses with high sales volumes but no profits to pay up to $100,000 a year in minimum taxes," but Davis made some calls to check the facts.
"A company has to have $100 million in Oregon sales in order for that to be the case, so these are not small businesses that will be paying under these measures," says Scott Moore, communications director with the Yes For Oregon campaign—a union-backed coalition pushing the yes vote. "There are 104 of those businesses in Oregon that are just paying the $10 minimum right now. 77 of those are headquartered out of state. Measure 67 finally requires large out of state corporations to pay more than $10 per year to do business in Oregon."
97.5 percent of the businesses in Oregon will pay either $150 or they won't pay any more than they pay today, under the new measure, says Moore. The measures protect schools funding, public safety, and senior services.
Voters get to decide whether or not the measures will finally be approved, and they have the next couple of weeks to return their ballots to be counted. If they approve the twin measures, the Oregon will have done what few other states have yet accomplished in the present economic debacle, prodding the old camel through the eye of the needle. But if they don't, several shades of torment apparently await the Legislature upon its return in February.
The Legislature's own fiscal analysts have already done that math:
If those tax measures fail, a wide range of programs face cuts to make up a projected shortfall in the state budget. Among the projected cuts: more than 15,000 seniors with disabilities would lose Oregon Health Plan coverage; 3,000 families with two unemployed parents would lose monthly payments; and the Department of Corrections would close three prisons and release 1,600 inmates.
One of the hardest-hit agencies would be the Department of Human Services. The department outlined 16 pages of proposed cuts to make up a 5 percent budget shortfall. Schools, universities, prisons, state police and courts could all be cut, lawmakers said Monday after releasing the report. The Legislative Fiscal Office, the Legislature's budget experts, compiled the list from proposals submitted by state agencies for cuts of 5 percent and 10 percent of their current two-year budgets.
"These cuts on top of $2 billion in cuts we made earlier this year would do great harm to our schools, our colleges and universities, and to core services that Oregonians are relying on in these tough times," said House Speaker David Hunt, a Democrat from Gladstone.
Hard to be on the fence about this pair of ballot measures, and the fact that Governing.com is paying attention reflects more than just boredom: If Oregon voters approve these measures, they set an example for even harder-hit state legislatures to follow. If so, we might find our way out of the mess, after all.
If you're interested in more information about the measures, the East Portland Chamber of Commerce did a great service by transcribing and posting a polite debate on the measures by Oregon State Representative Jefferson Smith and J.L. Wilson, vice president of Associated Oregon Industries.