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Latest entries from BlueOregon
Updated: 2 hours 19 min ago

Reason to hope for a commercial activities tax (CAT) accompanied by a CAT Fairness Credit

June 21, 2017 - 10:44am

It’s never too late to hope that lawmakers do the right thing. Here at the Oregon Center for Public Policy, we hope lawmakers enact a commercial activities tax that raises game-changing revenue, so Oregon can finally upgrade our schools and essential services. If they take that bold move, the Center hopes they will include an aptly named “CAT Fairness Credit.”

The tax reform plan the Joint Committee on Tax Reform has been discussing has contained several elements: a commercial activities tax (CAT), a credit against the CAT for businesses that pass profits (and losses) through to their owners’ personal income tax forms, and repeal of the corporate income tax (CIT). Hoping to make the plan more attractive to voters, the reform plan includes a new personal income tax bracket and the lowering of some of the rates in other brackets, and an increase in the Oregon Earned Income Tax Credit (EITC). We’ll call this combination of features the “proposed CAT plan.”

Unfortunately, the proposed CAT plan disproportionately benefits higher income households. Taxes go up as a share of income for all income groups except the top 1 percent, who see their taxes decline. They go up most for those in the bottom fifth of the income scale — seven times as much as for those in the top fifth. The top fifth in general, and the top 1 percent in particular, do so well because the repeal of the corporate income tax disproportionately benefits the wealthy. The change in personal income tax rates, while well intentioned, actually gives more benefits to wealthy households than to those at the very bottom of the income ladder.

While the change to the EITC is also well intentioned, this increase wouldn’t help non-working adults such as the disabled and elderly, or working childless adults. Nor is it sufficient for low-income working families to be held fully harmless from the CAT.

The good news is that the CAT plan doesn’t have to be so regressive. The plan could raise just as much revenue while protecting low-income taxpayers if the plan included a CAT Fairness Credit instead of the changes to the personal income tax structure and the expanded EITC.

The CAT Fairness Credit would be a credit on personal income taxes based on family size and income. It would cost about the same as the combined impact of the personal income tax changes and EITC increase, and would target relief to low- and middle-income taxpayers. Like the current EITC, the CAT Fairness Credit would be available even if it exceeded taxpayers’ personal income tax liability, and would be larger for lower income taxpayers and for those with larger families. It would also be doubled for elderly Oregonians, who typically don’t benefit from the EITC.

All else being equal, as noted in the charts above, a tax reform package with a CAT Fairness Credit reduces the regressivity of the proposed CAT plan when substituted for the changes to the personal income tax and expanded EITC.

So let’s hope that if lawmakers enact a CAT plan they include the CAT Fairness Credit.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

Republican health care plan is a disaster for Oregon’s Economy

June 20, 2017 - 9:00am

By Kelsey Denogean of Portland, Oregon. Kelsey is the owner of Pieper Cafe and a Main Street Alliance of Oregon Member.

I love owning a small business but the potential changes in health care legislation has me worried about my business’ future prosperity.

As the owner of Pieper Cafe in Portland, I am proud to contribute to Oregon’s economy. Like many small business owners, I work long hours to grow my business and create jobs for our local community. I have been in business for 5 years and have seen my neighborhood grow and prosper. Although Portland’s economy is healthy, I am always worried about keeping the doors open and the lights on-- recently the proposed American Health Care Act (AHCA) legislation has created even more uncertainties.

Since the Affordable Care Act (ACA) was enacted, I have not had to worry about accessing affordable health insurance. Myself and four employees all receive healthcare through the expansion of the ACA. For me, having health care is a necessity. When I was 35 years old, I suffered a stroke. Under the proposed AHCA legislation, insurance companies will be able to deny individuals with pre-existing conditions, like me, health care coverage. The consequences of the legislation would force me and many other small businesses to close our doors and lay off employees.

I am dreadfully concerned that Senate Republican leaders are secretly and quickly advancing their version of the House AHCA bill that would take health care benefits away from 23 million people – including many of the four million newly insured small business owners, employees, and self-employed entrepreneurs.

Instead of improving access and lowering health care costs, the Republicans’ plan places health care out of reach for working families across Oregon and jeopardizes protections for people with pre-existing conditions. Their proposal also slashes Medicaid by $834 billion, threatening the health care of 74 million Americans who rely on Medicaid every day and creating huge deficits in state budgets. Meanwhile, the Republicans in Congress are giving $664 billion in tax breaks to the very wealthy and insurance and prescription drug corporations.

The Republican’s healthcare proposal will be a disaster for small businesses, working families and Oregon’s economy. It is clear, if community members are spending more money on healthcare expenses then small businesses will lose customers, which will lead them to financially struggle, decrease involvement in their local communities and offer fewer jobs for Oregonians. Small businesses will no longer be able to contribute to the economy which will impact us all.

Categories: Blue Oregon Blogs

The average Oregonian might rightly ask, “The CAT? Why all the fuss?”

June 20, 2017 - 8:31am

Twenty-five cents for every $100 in sales.

That is how much a company in the construction industry with $100 million in Oregon sales would pay under the commercial activities tax (CAT) being discussed in the legislature. Those 25 cents would be paid by the company, reducing the profit passed along to the owners and taxed on their personal income taxes.

Compare that to what that company’s employees are paying. The average individual taxpayer in Oregon pays 24 times that amount — $6 on every $100 of income — in personal income taxes.

Or take the case of an auto dealer with $35 million in retail sales a year. That dealership would pay 24 cents on every $100 in sales, compared to the $6 that the employees pay.

Or consider a retail business with $1 million in sales per year — a sales goal many small business owners on Main Street would love to hit. That business would pay two cents in taxes on every $100 in sales. The average Oregon taxpayer pays 300 times that — $6 — in personal income taxes on every $100 in income.

The average Oregonian might rightly ask, “The CAT? Why all the fuss?”

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

People pay taxes on gross receipts, so why not businesses?

June 19, 2017 - 4:34pm

I’ve heard some folks opposed to enacting a Commercial Activities Tax (CAT) complain that taxing gross receipts, rather than profits, is unfair.

And yet the personal income tax Oregonians pay functions, in large part, like a gross receipts tax.

The big difference is the proposed CAT would be minuscule compared to the income tax we ordinary people currently pay.

The tax on personal income is a tax on receipts without regard to whether the taxpayer had a “profit” — money left over after expenses. Take, for example, two people with identical jobs and income, and who have different expenses, such as rent, student loans, or fuel costs to get to work. One person ended the year deeper in debt than when she started, while the other ended the year with extra money (“profit”) that she could put into a savings account. Yet, each would pay the same tax on their similar receipts of income.

Both the personal income tax and the CAT use “adjusted” receipts in determining the tax owed. The personal income tax uses adjusted gross income. The CAT, in turn, would adjust receipts by exempting the first $3 million in receipts from the tax rate.

According to the latest report from the Oregon Department of Revenue, the average personal income tax is 6 percent of adjusted gross income.

By contrast, under a recent legislative draft, the most that a business would pay under the CAT would be 0.75 percent on Oregon sales of services above $3 million, plus $250 for the first $3 million in sales. Some businesses would pay less, depending on the type of industry to which they belong. Auto dealers, for example, are retailers and would pay a rate of 0.35 percent on sales above $3 million.

This means, as illustrated in the above graph, an S-corporation retailer with $35 million in sales, such as an auto dealer, would pay just 24 cents on every $100 in sales under the proposed CAT, while the average employee will pay $6.00 on every $100 earned — 25 times as much.

The CAT looks like a pretty damn good deal for businesses when viewed from that perspective.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

PRIDE-ish

June 18, 2017 - 8:45am

In an 11th hour controversy, NW Pride Director Debra Porta asked Portland Police and Sheriff Deputies planning to march in this weekend's Pride parade to do so not wearing the uniform. Porta reported that the Northwest Pride Board was prompted to take the action by community members who'd had issues with police:

"...We have two things true at once..." said Porta in a letter to Portland Police and Multnomah Sheriff's Office, "LGBTQ people have made tremendous strides, in being able to serve in law enforcement as out individuals AND we have a great many in our community still traumatized and targeted by law enforcement, as a whole. Given both of these things, we at Pride Northwest, as the entity entrusted to represent and honor ALL of our community, find ourselves caught in the middle. We have been approached by many in our community, who don’t feel safe at their own Pride, with a great many planning not to participate at all."

Porta, the long-time leader in one of the hardest jobs in our LGBT community, rightly recognized the Board's untenable position - no matter what was said or decided, there were folks that were going to be pissed and hurt. Porta tried to thread the needle; while asking law enforcement to bag the uniforms, she also promised that no cop would be turned away, and later emphasized that the no-uniform thing was simply a suggestion.

But the effort to make the ask more kindly and gentle fell flat. Multnomah Sheriff's Office pulled out of the parade, other than assigned details, and individual Portland LGBT police officers responded with predictable hurt.

"To have my own gay community tell me to hide a part of who I am seems to be against everything they stand for,'' said Lt. Tasha Hager of PPB in a recent OregonLive article.

Hager is absolutely right. PRIDE isn't simply about who we innately are, but what we have chosen to become. More importantly, Pride is an opportunity to tell the world how, through our individual lives and efforts, we change the constructs and old ways of institutions. LGBT people, in facing our individual struggles, have learned how to be progressive catalysts in every kind of societal enclave.

It is precisely those proud LGBT officers that will lead police agencies away from the systemic "otherism" which is the template for bad practices and dangerous attitudes.

The proud lesbian officer, the gay cop of color, the transgender captain - unafraid to proclaim who they are or what they do - should be beside all of our community in both celebration and in crisis. They are positioned to be the change-agents law enforcement so desperately needs within its own ranks.

And for those in our community who are fearful and distrustful of all police, Pride is an opportunity to see that the policing community is not a monolith, but an institution that can become a greater and more positive community organization BECAUSE of these LGBT officers who walk with us.

Categories: Blue Oregon Blogs

Public structures and quality of life matter, not state rankings

June 16, 2017 - 7:00am

Click image to enlarge.

With lawmakers considering an overhaul of how Oregon taxes businesses, it’s a good time to reiterate a point we’ve made many times: When it comes to business climate and Oregon’s economy, the quality of public structures and quality of life matter, not how a state ranks in terms of spending and taxes.

Recently, a reporter tweeted that the Center seemed to be holding inconsistent positions on tax and spending rankings. He accused us of saying that state rankings are irrelevant when it comes to spending, but not when it comes to business taxes. Not so.

We’ve consistently pointed out that rankings on spending and taxes don’t matter.

For example, last year we explained,

How Oregon ranks in terms of revenue collection is not a very helpful metric, though the subject does come up often in political discussions. Such rankings tell us little about whether Oregon raises enough revenue to provide a quality education to all children, maintain roads and bridges in good working order and adequately support all the other public services that improve quality of life and business climate.

It is the adequacy of our tax system, not Oregon’s ranking, that ought to concern policymakers and other Oregonians.

And by rankings on revenue collections, we mean any kind of revenue, including business taxes.

As Oregon lawmakers focus on business tax reform, I hope they stop fretting about rankings and focus on what really matters: raising enough money to have quality public structures that make possible our quality of life and our strong economy. I hope they heed the comments of Mat Ellis, CEO of the tech company Cloudability (PDF), who recently told the Joint Committee on Tax Reform:

I am competing with companies like Google and cities all over the world to retain my highly skilled workforce. A big factor in our favor is the perceived quality of life here in Oregon. Yet when they have children they encounter an underfunded school system combined with a reluctance to consider anything beyond spending cuts to solve the myriad problems. It’s not as if I don’t pay them enough so that they couldn't send their kids to private school. But they do not want to send their kids to private schools. They want to live in a community which adequately invests in education and other critical services.

And that’s not what’s been happening. In response I've lost staff to places like London, Austin, Berlin and Helsinki, drawn by a higher quality of life, which public education is big part of. And that's just so far this year.

The business community has long known that public structures and quality of life, not low taxes, are what matter and what make Oregon a great place for business. One of my favorite slides to show in presentations is a clipping from a 1990 Fortune magazine article that named Minneapolis/St. Paul one of the “Top Ten Cities for Business.” Fortune noted that Minneapolis/St. Paul won second place because of the good public structures and quality of life enabled by high taxes:

Painfully high corporate and personal income taxes go for heavy expenditures on education, welfare, transportation, and parks. The system works.

The media and Oregon legislators should disregard rankings of spending and taxes. Instead, they should focus on raising enough revenue to create top-notch schools and other public structures that improve quality of life and the economy.

In the not-too-distant future I’d like to be writing and reading that Oregon is an example of how “the system works.”

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

This time, what’s good for Kansas is good for Oregon

June 10, 2017 - 10:00am

This week, the Kansas legislature finally had enough. On a bipartisan vote, it pulled the plug on massive tax cut experiment that wreaked havoc on the state’s schools, essential services, and finances.

Oregon lawmakers should take note. They should pull the plug on a tax cut of the same ilk as what Kansas just repudiated: preferential treatment for pass-through business income.

In 2013, as part of the so-called “Grand Bargain” special session, Oregon followed the lead of Kansas and granted special tax treatment to owners of businesses that pass through profits to the owners to be taxed under the personal income tax. The proposal failed to pass in the 2013 legislative session, but was brought back to life by then-Governor John Kitzhaber in the special session. Make no mistake: This tax break was mostly a big giveaway for wealthy business owners.

Kansas had already done something similar, albeit more extreme. In 2012, Kansas Governor Sam Brownback persuaded the Kansas legislature to exempt all of the income of a pass-through entity from the state’s personal income tax.

The version adopted by the Oregon legislature allowed pass-through income to be taxed at a lower rate than it otherwise would be under the personal income tax. It was Kansas-lite. Still, this tax break will cost Oregon about $282 million in the upcoming budget period.

Governor Kate Brown recommended that Oregon eliminate the Kansas-lite special tax treatment for pass-through income in her budget plan. Fortunately, a “bridge plan” just discussed this week in the Joint Committee on Tax Reform includes eliminating this misguided tax cut.

This time, what’s good for Kansas is good for Oregon. The Oregon legislature ought to follow the lead of Kansas, and in a bi-partisan fashion repeal the misguided special treatment of pass-through business income.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

How to push back against misleading claims about state spending that seek to derail a revenue-raising package

June 8, 2017 - 1:45pm

You don’t need to look far to see that Oregon is not investing enough to meet the needs and aspirations of Oregonians.

For example, to reach its K-12 education goals, Oregon’s experts on quality education say Oregon would need to increase school funding by about $2 billion in the upcoming budget period. Lack of state tax dollars means tuition is set to rise at Oregon public universities, in some cases by as much as 12 percent — the latest chapter in Oregon’s long-term disinvestment in higher education. Our state lacks a system of universal preschool even though it is widely recognized as key to ensuring that every child — no matter their ethnicity, race, or income — will succeed in school. And while health insurance coverage is at an all-time high, by one estimate, some 380,000 Oregonians still lack health insurance, including many children.

And yet, misleading claims about state spending can be found in newspaper ads and in emails from legislators. Such claims seek to derail efforts by the legislature to raise significant revenue to invest in schools and other essential services.

Here are some facts you can use to push back:

Oregon’s rank relative to other states in terms of spending is irrelevant

Opponents of raising revenue like to trot out figures that Oregon ranks high nationally in terms of per capita (per person) spending. Such rankings, however, tell us little about whether Oregon invests enough to provide a quality education for all children and to adequately support all the other public services that boost economic opportunity and the business climate in Oregon. And comparisons ignore whether Oregonians have or want to have better schools and better public services than other states have.

Comparing states is an apples to oranges comparison

Those who compare Oregon state budget spending to that of other states ignore that there are different financing arrangements among states. In some states, for example, most of the funding for schools comes from local government spending, whereas in Oregon the state budget is the main funding source. Some states have local or county-run family assistance programs, while Oregon runs a statewide program.

Measures of state spending that include federal funds are misleading

Some opponents of raising revenue rely on a measure of spending that includes federal dollars. Including federal dollars obscures the question of how much state taxpayers are spending. But if one were to compare federal spending among states, more federal dollars rather than less is generally a good thing. More federal Medicaid dollars, for example, is good for the health care industry and all the jobs associated with that sector. Each state dollar that is matched with federal funds buys more, making it a more efficient use of state dollars.

Per capita spending is a deceptive measure

Many of those seeking to derail a revenue measure point to per capita spending statistics. Per capita spending indicates how much is being spent for each person in the state. The measure is deceptive for at least two reasons. First, per capita figures say nothing about states’ capacity to spend. A state with a lower per capita spending level than Oregon can be spending a greater percent of personal income than Oregon. A good example is South Carolina. In South Carolina per capita spending is 12 percent less than Oregon, yet South Carolinians spend 8 percent more as a share of their personal income than Oregonians. Second, the cost of living and the cost of providing services vary among states, something per capita measures ignore. Mississippi may spend less per person than Oregon, but it can buy more in state services with each dollar because the cost of living is lower in Mississippi than in Oregon.

Oregon’s spending level as a share of our income — what we can afford — has been flat over time

Oregon state budget spending as share of Oregon’s total personal income has been essentially flat since the implementation of Measures 5 and 50, which limited property taxes and shifted the main funding responsibility for schools from local governments to the state budget. From 1999 to 2014, Oregon state budget spending ranged from a low of 8.5 percent to a high of 10.1 percent as a share of Oregon personal income. Over those 16 years, state budget spending averaged 9.2 percent. In 2014, the share stood at 9.5 percent.

A sign that spending is not a problem: There has been no growth in share of Oregon jobs belonging to state and local governments

About one out of seven jobs in Oregon are state or local government jobs — a slightly lower ratio than more than two decades ago. Since 1990, Oregon’s working-age population and the number of private sector jobs have both grown slightly faster than the number of people in state and local government jobs.

Decline in federal dollars and voters’ choices account for the bulk of the revenue shortfall

It’s important to understand the factors that underlie the $1.4 billion revenue shortfall for the next budget period. About $660 million of the shortfall is due to Oregon receiving fewer federal health care dollars, including money for the expansion of Medicaid under Obamacare. During the initial phase of the Medicaid expansion, the federal government paid 100 percent of the costs. In the coming biennium, the federal government will pay 94 percent, so Oregon needs to contribute the remaining 6 percent. In addition, some federal funding to help make the Oregon Health Plan more efficient was temporary, but needs to be replaced to continue that effort in the next budget period. Another $360 million of the budget shortfall is due to voter approval of three ballot measures in November 2016. Increased costs to the state of the Public Employee Retirement System (PERS), much of it due to the failure of earlier “reforms” to pass Supreme Court muster, account for some of the budget shortfall.

Revenue is at an all-time high because we designed a revenue system that grows well with the economy, and our economy is doing well

Oregon revenue is at an all-time high because Oregon’s population, workforce, personal income, and economy are bigger than ever. That doesn’t mean we have enough funds to avoid budget cuts. The fact that revenue is high is separate from whether it’s in Oregon’s best interest to avoid budget cuts to schools and essential services in the upcoming budget period, and to begin rectifying the long-term underfunding of essential services.

When measuring revenue growth, it is not useful to start with a recession-era year

Some of the claims exaggerate Oregon’s revenue growth by starting the analysis when Oregon was just beginning to recover from the Great Recession. As the Oregon Office of Economic Analysis points out, “measuring growth just in the expansion to date . . . is neither a good nor useful way to measure revenue growth . . . Only measuring changes over part of the cycle simply muddies the water and does not lend itself to being helpful.”

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

Lights out at a Brighter Oregon

June 6, 2017 - 11:41am

With the clock ticking on an Oregon legislative session that has yet to resolve a $1.4 billion revenue shortfall, the business lobby got an opportunity last Thursday to offer its solution to the problem. The testimony of a Brighter Oregon, a business coalition, took up the entire meeting of the legislature’s Joint Committee on Tax Reform.

But rather than offer specific solutions, Brighter Oregon’s spokesperson talked in generalities, complained about Oregon’s economic and fiscal performance, and threw cold water on the committee’s efforts to reform Oregon’s corporate tax system with the creation of a commercial activities tax. It wasn’t a bright move, as many felt the testimony was a waste of everyone’s time.

For example, Brighter Oregon spokesperson Patrick Criteser called on the legislature to explore ways for “maximizing federal Medicaid match.” When asked to give examples of how Oregon could draw down more Medicaid dollars, he couldn’t come up with a single one. That’s not surprising. Budget watchers long ago nicknamed our health and human services agencies the “Department of Medicaid Match” because they are so good at bringing in every available federal dollar. Criteser’s suggestion was nothing more than an unfounded complaint.

Brighter Oregon calls itself a coalition of businesses and groups that support the Oregon Business Plan. The Plan is the brainchild of the Oregon Business Council, which houses Brighter Oregon.

So it is interesting to contrast Criteser’s testimony on Thursday with the views of a prior spokesperson for Oregon Business Council, John Tapogna. Tapogna, who runs the consulting firm ECONorthwest, served as a spokesperson for the Oregon Business Council during the Measure 97 campaign.

In that capacity, shortly before the vote in November, Tapogna pointed out that Oregon has been managing its public programs and economy remarkably well. He also said he would support raising more tax revenue to get Oregon through its pension liability problem, improve education funding and stay on course with the Affordable Care Act.

Appearing on Salem radio station KMUZ to discuss Measure 97, Tapogna said (mp3):

Oregon has been on a remarkable six year run of what I would call exemplary public management. If I went back to 2010 and you told me where we got today, I would say it was a remarkably well managed fiscal recovery.

Oregon’s fiscal recovery is the seventh fastest in the country. We cut a remarkably smart deal with the Obama Administration, who sent us $2 billion to implement coordinated care organizations designed to lower per capita costs of health spending and help us get started with the Affordable Care Act.

We took some very politically courageous, tough decisions in the 2013 legislature to slow down the growth of prison beds. Those are tough political decisions that have to be made. And the legislature enacted changes to the PERS system that were also politically difficult, unfortunately overturned by the Supreme Court.

With the health care and the corrections reforms that liberated money to invest in the schools, in the last session we enacted full-day kindergarten. Our spending per student is now 23rd in the country; it is $1,100 higher per student than Washington state and it is closing on the U.S. average. We had a 20 percent increase in the higher education budget, and we are into the first steps of free community college.

If you had told me six years ago that we were able to make that kind of progress through 2016 I would have said ‘I am shocked and amazed and proud to be an Oregonian,’ and I am. This particular piece of public policy [Measure 97] is an abrupt step out of what otherwise has been a well-designed, well managed recovery.

Do we need more money going forward? Would I support a net increase in taxation to get us through some of these pension problems and pay into the affordable care act and expand education? Yes.”

Following those comments, Tapogna was asked about what specific revenue measure he’d support. He responded by giving a favorable nod (mp3) to a plan generally along the lines of what Senator Mark Hass and the Joint Committee on Tax Reform (which Hass co-chairs) have been exploring:

I am not so pure on gross receipts taxes generally that I wouldn’t say let’s go back to [Senator] Mark Hass, and say Mark Hass, and he has been looking at it, he calls it a commercial activity tax, but something that is far more thoughtful [than Measure 97], that doesn’t have a blanket 2.5 percent rate and isn’t so concentrated on what is simply political motivation of trying to put this on to corporations.”

You don’t have to agree with all of Tapogna’s points to realize it’s refreshing to hear a business community spokesperson recognize that Oregon’s economy and fiscal system is well managed and that a commercial activities tax is a reasonable solution to our revenue needs. Tapogna’s comments are far more productive than the stall tactics that lawmakers got from Brighter Oregon on Thursday. Tapogna’s comments make me think that someone needs to turn on the lights at Brighter Oregon.

Brighter Oregon talks about the importance of education to the state’s economic well-being. And yet, it offers mostly rhetoric, not the revenue that will make it possible for Oregon to have a first-rate, pre-K through college education system. If the business community really wants to have a brighter Oregon, it should stop impeding efforts to enact a robust and fair commercial activities tax to raise the revenue needed to strengthen our schools and essential services for all Oregonians.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

Oregon needs a statewide transportation package for the next generation

June 2, 2017 - 10:00am

By Anthony Bencivengo of Portland, Oregon. Anthony studies environmental policy at Reed College.

When was the last time you drove somewhere?

If you’re a college student like me, it might take you awhile to remember. I haven’t driven myself anywhere in weeks because I don’t own a car. When I need to get somewhere I usually walk, bike or take public transit.

I’m not alone. My entire generation is moving away from cars as our main mode of transport. As of 2014, 23.3% of people between age 20 and 24 said they don’t even have a drivers’ license.

There are many reasons why. Some of us can’t afford cars (me). Others choose to walk or bike, hoping to save the planet and get fit (also me). And more and more of us are recognizing that in places with a fast and reliable mass transit system, owning a car is simply unnecessary.

I need my state to invest in a reliable, equitable, affordable and sustainable mass transit system for the future. That means expanded bus service, more light rail, and communities that are safe to walk and bike in.

This isn’t just about convenience, or even reducing air pollution and our carbon footprint. It’s about saving lives. Across the US over 37,000 people die in car accidents every year, 1,600 of them children. Those numbers didn’t seem real to me until Mark Angeles, a student who had just graduated from my college, was killed when a car struck his bike at an intersection in Portland. When I cross the road where he was hit – as many of my fellow students do each day going to and from campus – I try not to wonder whether one of my friends will be next.

No more ghost bikes. Our state needs a transportation system that works for people without cars, and we need it now.

The state legislature just released a new transportation funding package, and there are some promising proposals:

  • A major new Statewide Transit Improvement Fund, dedicating a projected $107 million/year to expand transit service in rural areas and underserved urban neighborhoods
  • Over $15 million/year for bike and pedestrian safety, including sidewalks, off-road bike paths and new bike lanes
  • $10 million annually for the Safe Routes to School program, giving elementary and middle schoolers safe ways to walk to class

Through the tough negotiations to come, it’s important that these items stay in the package. And in my opinion, we need far more investment in transit, bikeways and sidewalks. In the current proposal these active transportation investments represent about 15% of the package, most of what remains being poured into highway projects.

Young people like me need a package that funds clean, affordable ways to get around, not the dirty and expensive transportation investments of the past. I urge our state legislators to fund the multimodal transportation system of the future that all Oregonians deserve.

Categories: Blue Oregon Blogs

Oregon Ground Zero in Congress’ Attack on Science

May 31, 2017 - 9:51am

By Henry Waxman and Erica Stock.

Former Congressman Henry A. Waxman spent 40 years serving in the US House of Representatives, serving as chairman and ranking member of the Energy and Commerce Committee and the Oversight and Government Reform Committee. He was a lead author of the landmark Clean Air Act Amendments of 1990, and currently serves as Chairman of Mighty Earth.

Erica Stock is the director of the Oregon Sierra Club, and has extensive experience as a grassroots organizer, fundraiser, natural resources policy analyst and activist. Erica is passionate about empowering local communities working hard to protect and restore their rivers, fish, wildlife, and wildlands.

What if we told you that the Republican Congress just passed legislation to promote renewable energy and reduce carbon emissions? Most astute – or even sentient – observers of Congress would laugh out loud, including the Republican leadership themselves.

Nonetheless, Republicans and some Democrats are touting the last appropriations deal as a win for renewable energy – even though the provision they’re touting is a huge step backwards for the climate, Oregon’s air quality, and the long term economic prospects for clean energy.

A policy rider buried in the bipartisan spending bill requires the federal government to treat all burning of trees for electricity (known as biomass energy) – as carbon-neutral or emissions-free. According to Congress, burning trees for electricity is now as clean as wind or solar power.

Unfortunately, actual scientists who have studied the issue have found that burning trees for electricity creates 50% more carbon pollution at the smokestack than coal, on average, per megawatt hour of energy. These policies are doubly bad because they drive the incineration of trees that, when living, continue to suck carbon dioxide out of the air and breathe out oxygen.

Powerful timber interests have long advocated for special treatment, arguing that trees eventually grow back, so it will all be okay. Trees are renewable, they say, and eventually all that carbon that was released will be recaptured.

There are many flaws to this logic. In places that lack sustainable forest management, there’s no guarantee that a forest, once cleared, will be allowed to grow back. And, introducing a whole new category of demand for forest products is likely to result in increased pressure and bigger harvests in perpetuity, reducing carbon sequestration while forests are alive. As a result, it will take decades or longer before the carbon released during combustion is recaptured. Our window of time to effectively mitigate climate change is much shorter.

The EPA’s Scientific Advisory Board has been reviewing the research to provide concrete guidance on the impacts of biomass. Industry backers know that any honest scientific look at the evidence will show biomass electricity’s huge negative impacts on the environment. As a result, they’ve relied on the Republican Congress’ willingness to attack science to avoid being bound by any actual data.

Oregon is ground zero in this fight. Traditionally, mills and other wood product facilities in Oregon have burned their own wood waste for on-site heat and power, an environmentally-friendly use of biomass when small-scale and limited to waste products. And over the last several decades, Oregon as a whole has moved towards sustainable balance between conservation and a healthy forest products industry.

A sudden surge in demand for wood to burn would imperil this balance. The Boardman power plant in north-central Oregon is Exhibit A, a 550-megawatt behemoth whose owners are considering a transition to biomass after it retires as a coal-burner.

A 2016 report by the Oregon Sierra Club and Mighty Earth found that there is nowhere near enough logging or mill waste in the state to feed a plant the size of Boardman. Officials connected with the main wood supplier for Boardman have stated publicly that the trees and woody material would be sourced from national forests.

Ironically, shifting the plant to biomass will turn a dirty coal fired power plant into an even dirtier biomass plant. Oregon has so much wind and solar potential that we don’t need to consider fake solutions like biomass as we kick the coal habit.

But perhaps even more chilling is the signal this policy sends around the world. Rainforest countries could interpret this policy as not only an encouragement to burn forests for energy, but could call it a solution to climate change. Asian coal utilities trying to avoid a shift to truly clean sources of electricity may start to aggressively compete for wood raw materials to burn, not only from Oregon, but also from tropical rainforests such as Indonesia.

At some point, our nation will take real climate action. When that happens, it’s critical that it uses science to measure different fuels’ impacts – so we don’t face the absurd situation that burning wood somehow is considered as clean as solar or wind. Oregon’s Congressional delegation should use their credibility as representatives of a forest state that is considering a biomass power plant to rescind this policy and support real, forward-thinking measures that promote truly clean renewable energy and protect our forests.

Categories: Blue Oregon Blogs

Will Oregon Democrats Betray Renters ?

May 26, 2017 - 9:00am

By Shamus Cooke of Portland, Oregon. Shamus is an organizer for Portland Tenants United.

Oregon’s housing crisis is suffocating the state, and Democrats have the power to fix it. But will they? The Democrat-dominated legislature is discussing pro-renter House Bill 2004, which passed the House but faces a precarious future in the Democrat-led Senate, where the staunchest opponents are also landlords (Democrats need zero votes from Republicans, who are unified against the bill).

House Bill 2004 is simple: it makes rent control legal, allowing local municipalities to craft their own policy (there is currently a statewide preemption). It also makes no-cause evictions illegal, giving tenants basic due process in the eviction process (though it still allows landlords to use for-cause evictions for tenants that don’t pay rent, damage property, break laws, etc).

House Bill 2004 is also ‘revenue neutral’, meaning it would cost taxpayers nothing. In actuality it would likely save taxpayers millions a year, since it would relieve pressure from the homeless crisis by keeping people in their homes.

Less money would be needed for homeless shelters and social services in general, since, as author Matthew Desmond explains in his celebrated book Evicted, poverty is often a consequence of evictions, not the cause.

Who are the Democrats that are biggest barriers to House Bill 2004? Democratic Senator Betsy Johnson—a landlord—is the staunchest opponent, according to lobbyists inside the Capitol. Her district is packed with constituents who are renters, voters who will not be pleased if she ends up voting ‘no’ on HB 2004, or seeks to maim it by removing the rent control provision from the bill (it should be noted that the very notion of a ‘preemption’ is a corporate-driven idea, long championed by the right wing, but recently accepted by some Oregon Democrats).

Rod Monroe is another Senate Democrat and landlord who’s not supporting the bill; he owns a 51 unit complex in renter-heavy east Portland, where voters put him into office. These same voters will think twice in the next election if Monroe votes ‘no’ on HB 2004.

Then there is Democratic Senate Majority Leader Ginny Burdick, another landlord who Capitol lobbyists say wants to water down HB 2004—in effect drowning it—before she’ll consider voting yes.

In regard to Burdick’s landlord status being a potential conflict of interest, she was once quoted in Willamette Week as saying “I declare the potential conflicts and I vote for the tenants.” We hope she listens to her own advice and stops acting as a barrier to HB 2004.

Not all Democrats who are landlords oppose the bill. Senator Laurie Monnes Anderson is also a landlord, but she’s a co-sponsor and champion of HB 2004, putting to shame her Senate colleagues.

What do Democrats have to say about opposing HB 2004? One Salem lobbyist said “they’re [Senate Democrats] basically regurgitating the landlord lobby’s talking points.”

One reason why Democrats might like landlord-lobby talking points is that the lobby created the ‘Equitable Housing PAC’, which has poured thousands of dollars into legislators’ election war chests.

One of the key talking points is also the most ridiculous: legislators have actually been quoted saying “rent control hurts renters”, a comment as perplexing as “food stamps harm the hungry” or “homes hurt the homeless”.

The other anti-rent control arguments are equally nonsensical, and follow the awful logic of neoliberal economics which argues “any regulation on the ‘free market’ has unintended consequences”, a savvy yet vapid argument created by the big banks, big corporations, and big landlords that acts as a permanent barrier to any limit on their power.

When Portland Tenants United wanted to debate rent control with the landlord lobby, Multifamily NW, the landlords declined. But a PSU professor took up the challenge, championing the anti-rent control position against tenant organizer Margot Black, who most listeners would agree dominated the debate. Ultimately the anti-rent control arguments dissipate under any scrutiny.

Several Senate Democrats say they would vote ‘yes’ on HB 2004 if the rent control provision was amputated from the bill. Yet few Democrats would say publicly that local municipalities shouldn’t have the power to decide rent control for themselves, since landlord talking points are most effective behind closed doors.

If HB 2004 fails—or is disfigured beyond recognition by amendments—voters won’t soon forget; Portland Tenants United has every intention of reminding them next election.

Oregon is at a historic crossroads, where renters are finally given the chance to get basic rights and cities will finally have the chance to implement rent control if they so desire. If Democratic Senators continue playing political games with tenants rights they’ll be gambling with their political future come next election.

Categories: Blue Oregon Blogs

Pink slips for teachers, a big tax cut for the wealthy

May 24, 2017 - 1:29pm

School districts in Oregon have been drawing up plans for staff cuts, in case the Oregon legislature fails to come up with the revenue needed to fill a $1.4 billion state revenue hole. And according to several teachers who spoke during a town hall in Portland this past Saturday, pink slips have already started landing in some schools.

While Oregon schools brace for layoffs, the richest Oregonians wait for a big income tax cut to fall into their laps.

Last week, we learned that Oregon is on course to trigger another personal “kicker” — the automatic income tax cut that kicks in when non-corporate revenue collections exceed the amount forecast two years earlier (in May 2015 in this instance) by 2 percent or more. When that 2 percent threshold is reached, the state spends the full amount of unanticipated revenue in the form of an income tax credit. Right now, state economists are predicting that revenues will exceed the two percent threshold by $70 million. If that prediction holds in September, and if the Oregon legislature does nothing to stop it, the state will spend about $400 million on kicker tax credits at tax time next year.

It looks like the kicker is kicking because some extremely wealthy Oregonians died. While estate tax revenues generally track changes in home sales and stock prices, they are impossible to accurately predict. State economists now project revenue from the estate tax to come in $110 million more — 50 percent greater — than the prediction made in 2015. In other words, if some ultra-rich people had not died, the kicker would not be kicking.

It’s ironic that deaths among the ultra-wealthy are making the kicker kick, because the kicker disproportionately benefits the wealthiest Oregonians. Each person’s income tax (not estate tax) payment for tax year 2016 determines the size of the kicker tax credit they will get in 2018. If the state economists’ current estimates hold true, the typical (median) Oregon taxpayer — one with income in the $30,000-$35,000 range – will get about $85 kicked off their 2017 taxes. The average member of the top 1 percent of earners — those who make at least $368,000 annually — will get a tax cut of about $4,505.

Another way of looking at how the kicker tilts in favor of the well-off is to consider the share of kicker dollars that would flow to different income groups. Oregon’s richest 1 percent are expected to get over 21 percent of all the kicker dollars, nearly double the share projected for the lowest-earning 60 percent of taxpayers (about 12 percent). Further, the highest-earning 20 percent of taxpayers together will receive 70 percent of kicker dollars, while the remaining 80 percent of Oregonians will get 30 percent of the kicker.

Oregon’s schools and essential services already suffer from chronic underfunding. The $1.4 billion shortfall only makes a bad situation worse.

The choice before lawmakers is clear: Suspend the kicker to protect education and other essential services, or allow big tax cuts for the wealthy to go through and risk more pink slips at Oregon schools.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

Small voices with a big stake in state budget outcome

May 15, 2017 - 11:10am

Poor children don’t have a megaphone. They can’t create a dark money-funded group to pay for TV ads that attack lawmakers for their ideas.

Yet, Oregon’s most vulnerable kids have an outsized stake in the current tax and budget negotiations in the legislature. Many children in families receiving rudimentary cash and job training assistance through Oregon’s Temporary Assistance for Needy Families (TANF) program would pay a steep price with budget cuts, should a revenue solution fail to materialize.

Sadly, this is nothing new. Whenever the state faces a shortfall, the TANF program often ends up on a budget cuts list, for two reasons. First, unlike Medicaid, the federal TANF block grant structure provides little incentive for Oregon to maintain its own TANF investments. Second, there is no large, politically powerful industry with a financial stake in TANF to go to bat for them with the politicians.

Right now, the legislature’s budget writers have warned that, in the absence of new revenue, TANF is in the crosshairs. As the Oregon Center for Public Policy has outlined in a recent paper, the proposed cuts would drive 11,000 poor kids deeper into poverty, making their life prospects even bleaker.

For instance, one proposal would make the TANF lifetime time limits significantly harsher than they already are. As a result, after 48 months, the maximum cash grant for a parent with two children would drop from $506 per month to $348 per month, despite the parent’s efforts to become employed. At 60 months, the grant would drop to zero. Families with physical and mental health barriers to work need more time and support to overcome them. As such, this cut would harm children who already face great barriers to a successful life.

Other proposed cuts are equally harsh and would impact children in households with disabilities and children being raised by relatives.

Oregon’s poorest kids don’t have a megaphone. It is up to us — you — to speak loudly on their behalf.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

A gross receipts tax? Oregon already has one

May 10, 2017 - 11:38am

The Oregon House leadership should be commended for putting forward a bold revenue proposal that would improve the lives of Oregonians. Their Oregon Education Investment Initiative would not only help fill the existing budget gap, but also result in about $2 billion in new investments, mostly in education — from pre-K to higher education. The funds would come from a tax on gross receipts for businesses with Oregon sales above $5 million a year. The proposal would also eliminate the corporate income tax and reduce the personal income taxes of low- and middle-income Oregonians.

For some, talk of a gross receipts tax is a non-starter.

They may be surprised to learn that Oregon already has a gross receipts tax. More than two-thirds of all C-corporations already pay taxes based on their Oregon sales, not profits.

These businesses pay Oregon’s corporate minimum tax. It’s a tax based on gross receipts, and it kicks in when it exceeds a corporation’s tax under the profits tax. This structure has been in place since 2009, after Oregon voters enacted Measure 67. While it’s a very modest gross receipts tax, nonetheless it’s a tax based on Oregon sales.

It may also surprise some to learn that Oregon’s existing gross receipts tax came from a proposal initially floated by the Oregon Business Association in 2009.

The Oregon Education Investment Initiative unveiled last week is certainly bold, but not novel in its use of a gross receipts tax. More than two-thirds of corporate taxpayers have been paying taxes based on sales, not profits, for some time now.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

Don’t know much about civics: Overwhelming majority (93%) of U.S. adults believe civics education should be bolstered in public schools

May 1, 2017 - 11:23am

By Jacel Egan of Salem, Oregon. Jacel is the marketing communications manager at icitizen, civic engagement tool that connects citizens and their elected officials through online polling.

According to a new icitizen survey released by Sen. Chuck Riley (OR-15), more than nine in 10 Americans believe that more emphasis should be placed on civics education in the public school system.

“We’re living in a time now where it’s hard to tell the difference between fake news and real news, and alternative facts are being presented as truth,” said Oregon Sen. Chuck Riley. “It’s clear constituents want to address this issue head on, and as an elected official, I’m obligated to do what I can to help future generations be prepared and informed citizens.”

Fully 84% of respondents support requiring high school students to pass a proficiency test in civics in order to earn their diploma (10% oppose, 6% unsure). This crosses age, gender, and party lines, and actually increases with age: support is at 74% among millennials and reaching upwards of 95% support among seniors ages 65+.

Taking the requirement further, almost a three-fourths (74%) of Americans support requiring high school students to take and pass the U.S. citizenship test to demonstrate civic proficiency (21% oppose, 5% unsure). The strongest opponent of this requirement are racial minorities; about a third expressed their disapproval (34%).

"Given the dramatic increase in civic engagement after the election, it's no surprise that emphasis on civics education would be a priority across party and demographic lines," said Cynthia Villacis, icitizen's Director of Polling. "Lawmakers should be cognizant while drafting legislation to be inclusive and ensure that these proficiency tests accommodate those with special needs or language barriers."

Methodology: The survey was conducted online from April 5-13, 2017 among 1,245 American adults. In order to achieve an accurate demographic representation of the public, the data were weighted to U.S. Census and national benchmarks for gender, age, race, education and party identification. The margin of error for the full sample is +/- 2.78 percentage points and is higher for subgroups.

Categories: Blue Oregon Blogs

This May Day, think of not just flowers, but of how Oregon’s economy can do better for its workers

May 1, 2017 - 8:58am

May Day, for some Americans, is a celebration of spring’s arrival, replete with bright flowers and maypoles. But for many around the world, May 1st is International Worker’s Day. It commemorates the deaths of protestors fighting for an eight-hour workday in Chicago’s Haymarket Square in 1886.

So today is a good day to ask: How is Oregon’s economy doing for workers?

Oregon’s economy is strong. As the Oregon Center for Public Policy’s latest publication shows, Oregon had the nation’s second-fastest growing economy from 2001 to 2015, on a per-capita basis. Only oil-rich North Dakota expanded faster over that period. In that time, Oregon’s economy grew at nearly triple the rate of the national economy. Today, Oregon’s unemployment rate stands at a historic low.

And yet, all is not well for Oregonians. Poverty remains at a higher level than before the Great Recession. In recent years, Oregon has seen a rise in the share of families living in poverty despite having at least one working parent, as well as a sharp increase in the number of families struggling to put food on the table. Economic growth has disproportionately flowed to the very top, as the incomes of the richest of the rich have rebounded to near record highs.

There are ways lawmakers in Oregon can make the economy work better for everyone.

One of the most important things lawmakers can do is to adequately fund the public services that benefit all Oregonians. Investing in education, for example, opens the doors of opportunity for the next generation, while setting the stage for a stronger state economy. Similarly, extending health insurance to all children in Oregon ensures that everyone has a chance to be healthy and succeed in school and life, while creating a more skilled workforce that can strengthen Oregon’s economy.

To accomplish this, Oregon lawmakers must confront the state’s revenue problem with a revenue solution. Oregon faces a $1.6 billion revenue shortfall. Unless lawmakers find the revenue to fill the shortfall, schools and other essential services will suffer, as will all Oregonians who benefit from them.

Addressing the current budget shortfall is not enough. The quality and reach of public services are insufficient for all Oregonians to gain from the state’s economic success. Public schools, for example, have not recovered from the devastating impact of property tax changes in the 1990s. Lawmakers must raise adequate resources to confront the long-term underfunding of public services if Oregon is to become a place that offers everyone a meaningful opportunity to thrive and is a good place for workers on May Days to come.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

Clearing the smoke on the pot tax

April 20, 2017 - 12:32pm

It’s 4/20. For some, this date may trigger the often-asked questions: How much revenue is the tax on marijuana generating? And what’s it being spent on?

Oregon’s state tax on marijuana brought in about $67 million in the 12-month period through February 2017.

That’s more revenue than state officials expected , but it’s still small trimmings in terms of Oregon’s revenue sources. To put it in perspective, the state tax on pot is bringing in less than 1 percent of the amount that the personal income tax —the biggest source of revenue for the General Fund (the “state budget”) — generates in a year .

The revenue from the state tax on pot does not flow to the General Fund. Instead, the money is dedicated for specific uses. Forty percent goes to grow the size of the Common School Fund; the earnings generated by the Fund go to schools. The rest of the state tax on marijuana goes to mental health treatment, drug abuse prevention, and law enforcement programs at both the state and local level.

There you have it.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

8 key things to know about Oregon corporate taxes

April 14, 2017 - 6:00am

Dark political money is flowing in Oregon. It seeks to squelch efforts in the legislature to raise taxes on corporations. This is happening, of course, as a $1.6 billion revenue shortfall threatens cuts to schools, health care, and other public services that benefit all Oregonians.

Without a doubt, raising corporate taxes is the place to start when it comes to raising revenue — not only to protect vital services from the current budget crisis but also to strengthen them so they improve the lives of all Oregonians.

Here are eight key things to recognize about Oregon corporate taxes.

1. Corporations used to contribute a lot more in income taxes than they do now.

In the mid-1970s, corporations contributed about 18.5 percent of all income taxes paid in Oregon. Today, the corporate share of has shrunk to just 6.7 percent. That’s a decline of nearly two-thirds. This has resulted in Oregon having less money to invest in schools, health care, and other key services. And as corporations have shed their income tax responsibilities, individuals and families have had to pick up the slack.

2. The Oregon Lottery now brings in more than the corporate income tax.

How shamefully low have corporate income taxes sunk? So low that the Oregon lottery brings in more revenue. That’s right. A source paid mainly by Oregonians struggling to make ends meet or with a gambling addiction (or both) does more to support our state’s schools and other vital public services than Bank of America, Verizon, Walmart, and all the other corporations doing business in Oregon combined.

3. Corporate property taxes have also shrunk.

In the late 1980s, corporations and other businesses contributed about half of all property taxes levied in Oregon. Today, they contribute about 40 percent — one of the harmful legacies of Measures 5 and 50 in the 1990s. Property taxes are the second largest source of revenue for Oregon public schools, trailing only income taxes. They are also the main way communities fund services that foster quality of life: libraries, parks, and emergency response services, for example.

4. Oregon, among all states, has long ranked at or near the bottom in terms of business taxes, including corporate taxes.

For over a decade now, Oregon consistently has come out at or near the bottom among all states in terms of its “total effective business tax rate.” This is according to a study funded by a big corporate lobby group.

5. The shrinking of corporate taxes didn’t happen by accident.

Legions of lobbyists, lawyers, and accountants have served corporations well over the years. Corporate income tax contributions have shrunk due to corporations lobbying for and winning many tax loopholes and subsidies, pursuing aggressive tax sheltering strategies, and taking advantage of corporate forms largely exempt from corporate income taxes. In short, corporations have gamed the system.

6. While they avoid taxes, corporations benefit from our tax system and lobby for tax subsidies.

Just because corporations have shed much of their tax responsibilities, doesn’t mean they thumb their noses at what the tax system offers. On the one hand, the tax system pays for, among other things, the schools that educate and train their workers, the courts that resolve their disputes, and the public safety services that protect their property. According to a corporate-funded study, businesses in Oregon get a bigger benefit out of the taxes they pay in Oregon than just about any state in the country. On the other hand, the tax system directly subsidizes corporations through a long list of tax credits, deductions, and subtractions.

7. Until recently, a minority of lawmakers could prevent the closing of corporate tax loopholes and subsidies. That’s no longer the case.

Not long ago, the legislature believed — upon advice of their lawyers — that closing a tax loophole or subsidy required support from a supermajority (three-fifths) of lawmakers. That meant that a minority of lawmakers could block any effort to reform or eliminate a corporate tax loophole or subsidy. A recent Oregon Supreme Court decision, however, has made clear that a simple majority suffices, giving the Oregon legislature significantly more room to maneuver in terms of increasing funding for services that benefit all Oregonians.

8. Corporations hide behind corporate tax secrecy, but it doesn’t have to be that way.

We know corporations as a group are getting away with paying far too little in income taxes, but we have no way of knowing which corporations pay their fair share of state income taxes and which are effective at avoiding taxes. And we know little about which tax credit subsidies they use to pay nothing or next to nothing in taxes. That’s because corporations currently are not required to disclose information on how much they pay and which tax credit subsidies they use. The legislature can force corporations to disclose that information, a move that would allow Oregonians to see for themselves which corporations are paying a fair share and which are not, and pave the way for necessary reforms to our corporate tax system.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

Oregonians need homes, not tax shelters

April 12, 2017 - 1:48pm

You may have heard the radio ads, seen the large newspaper ads, or pulled the shiny postcard from your mailbox touting a proposal to create a “First-Time Home Buyers Savings Account.”

The marketing materials are from an entity with the benign sounding name “Oregon First Home Coalition.” It’s nothing more than a front — a political action committee, actually — for the Oregon Association of Realtors. This political action committee has spent at least $750,000 campaigning for the proposal.

Ahead of upcoming House and Senate meetings on the proposal (HB 2996 and SB 849), the Oregon Center for Public Policy published a paper analyzing the flaws with this new tax shelter. Here’s what you should know:

1. The home buyer savings program is structured to mainly benefit well-off families and their kin. We know this because it is structured in the same way as another tax savings program that steers 87 percent of the tax benefits to the wealthiest fifth of Oregonians.

2. There is no evidence the proposal would increase home ownership. The association of realtors has offered no evidence this program would boost home ownership in any meaningful way and there is no reason to think that it would. Because it is tailored to benefit the most well-off, the program would simply be subsidizing home purchases that would already occur.

3. The proposed tax shelter will divert $35 million from schools, affordable housing, lowering student debt and other essential services. Following the release of our report, the Legislative Revenue Office estimated that the realtors’ tax shelter would cost about $35 million in the upcoming budget period, 10 times the realtors’ estimate. That would mean that the legislature would be digging the existing budget hole even deeper — just to create a tax shelter for the well off.

“Buying a first home should be more than just a dream,” the Oregon Association of Realtors’ marketing proclaims. That’s certainly true, but the lobby group’s proposal would keep it a dream for the middle-class — while creating a real-life tax shelter for the rich.

Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

Categories: Blue Oregon Blogs

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