By The Oregonian Editorial Board
What would Oregonians do if given a $1,600-per-person check every year to spend however they saw fit? Pay for rent or save for a child’s college education? Maybe hold onto the cash to cover the surprise expenses that arise at the worst times? The possibilities are bound to spark all kinds of daydreaming.
But Measure 118, which would fund such rebates through a massive increase in Oregon’s corporate minimum tax, relies on a fair amount of wishful thinking itself. Supporters maintain that Oregonians will, on balance, benefit from the rebate program, despite state legislative analysts’ warning that the proposed 3% tax on sales over $25 million will dampen employment and income growth. Measure 118 advocates also contend that companies won’t change their pricing to help pay for the largest tax hike in Oregon history, even though the state projects the opposite. And while they say that the proposal is all about redistributing new tax money – about $7 billion a year – the measure is expected to divert $1 billion a year to the rebate program that would have otherwise gone to the General Fund for education, health care, public safety and other vital services.
Oregonians should heed the state analysts, independent think tanks and elected officials all warning of the unintended consequences of this measure. A tax that raises the price of medicine, food and utilities, saps funding for essential services and sends that money as rebates to all residents – regardless of income or need – is a formula for chaos. Voters should resist advocates’ misleading promises of free money and vote “no” on this too-good-to-be-true proposal.
Oregonians have already contemplated and rejected a similar tax proposal. In 2016, public employee unions sought to pass a 2.5% gross-receipts tax on corporations with sales over $25 million, with the proceeds going to the General Fund. It lost by 20 percentage points, as Oregonians recognized that both the size of the rate, which was far higher than those charged by other states, and this particular mechanism of taxing companies on sales – not profits – could result in painful price hikes.
Measure 118 supporters argue that any fears are overblown and the benefits to low-income Oregonians are worth the change. But they gloss over the complexity of consequences that result when you fiddle with tax policy, particularly by ballot measure. For example, while they concede that the additional revenue may cause some families to lose eligibility for federal benefits, they note that the measure directs the state to ensure those families are not harmed. Simply including such language does not make it so. As Legislative Revenue Officer Chris Allanach told legislators last week, it is unknown how much the state would have to reserve to help affected families in as many as a dozen different federal programs and the complexity of sorting through those issues is immense.
Measure 118 advocates also seemed flummoxed by the notion that the rebate program could affect state funding for public services, reflecting how poorly informed this measure is. “We just do not see how this can lead to a decrease in General Fund revenue,” chief petitioner Antonio Gisbert said, arguing that their proposal to increase the minimum tax with the 3% gross-receipts mechanism will bring in all new revenue.
What he fails to consider is that companies currently pay either the corporate minimum tax or a set percentage of profits – whichever is greater. Under Measure 118, larger companies that typically paid the set percentage would have to start paying the 3% tax on sales instead. And because the measure earmarks those dollars to go to rebates, the General Fund would soon see revenue fall by about $1 billion in revenue a year, as Allanach explained in his presentation. That’s only one of several ways that Measure 118 mucks up Oregon’s revenue streams, costing the state even more.
Advocates again say that the Legislature can simply fix any problems such as these in implementation next year. But there is nothing simple about untangling this mess of a measure or doing so in a way that aligns with what voters were told to expect.
We shouldn’t be surprised by the lack of diligence, however, considering that funding for this campaign comes almost entirely from a few wealthy Californians who are using Oregon to dabble in policy making. The funders, including billionaire Josh Jones, philanthropist Gisele Huff and a long-shot San Francisco mayoral candidate, Dylan Hirsch-Shell, all support the idea of universal basic income, in which the government provides periodic payments to residents to use however they choose. But they don’t have to live with the consequences of this experiment. Oregon, which just rolled back drug decriminalization – another public policy experiment foisted on it by outside advocacy groups – should resist becoming a laboratory again for outsiders’ pet issues.
No other state is enacting this type of program. Measure 118 advocates attempt to compare this with an Alaskan program that distributes an annual cash payment to all residents, but this measure is nothing like it. The payments to 600,000-plus Alaskans come from investment earnings off the Alaska Permanent Fund – a now $79 billion fund built primarily from stashing a portion of royalties paid to the state by oil companies over decades – not a gross-receipts tax whose repercussions will reverberate back onto residents.
In defending the measure, supporters pointed out that The Oregonian/OregonLive’s parent company would likely have to pay this new tax, if passed. They also noted that the president of the editorial board is a member of the Portland Metro Chamber’s board. Both are true. But the editorial board’s position is based on the measure’s obvious flaws and state revenue analysts’ projections that show how deeply threatening this is to Oregon’s economic health.
We are far from the only ones saying this. Take a look at the very long list of elected officials, nonprofit organizations, corporations and unions collectively standing in opposition to this measure. They include Gov. Tina Kotek; the Republican and Democratic leaders of the state Senate and the state House; dozens of other legislators of both parties; the left-leaning Oregon Center for Public Policy and Tax Fairness Oregon; the right-leaning Taxpayer Association of Oregon; Oregon Business and Industry; Oregon Education Association; Northwest Grocery Retail Association; nonprofits including the Coalition of Communities of Color and Oregon League of Conservation Voters; and health care groups including the Oregon Medical Association and Oregon Dental Association.
Meanwhile, when asked in our editorial board interview, the supporters could not name a single elected official who has endorsed the measure.
The opposition reflects an impressive show of unity from entities across spectrums – politics, geography, membership and mission – all urging Oregonians to vote “no” on Measure 118. Voters should join them.