AFL-CIO sees success in better-crafted tax plan

SALEM - A day following the defeat of Ballot Measure 28 - the temporary income tax increase - Oregon AFL-CIO President Tim Nesbitt sat before the Senate Revenue Committee testifying that success could come with a better-crafted tax measure.

Asking voters to approve even a small income tax increase was a tough proposition during a recession, but supporters of Measure 28 were able to close the gap in an expected huge "no" vote, proving that voters care about schools and services.

Nesbitt said Measure 28 ignored the fact that working families in Oregon are paying more in taxes than ever before, while businesses are paying a lot less. He cited a new study by the Association of Washington Business in its "2003 Competitiveness Redbook," which shows that Oregon is a low tax state for business (lowest of the 11 Western states on two key measures) and a relatively high tax state for households - fourth-highest of the 11 states).

Nesbitt outlined several options for tax reform that would help correct the disproportionate shift of taxes to working families, raise new revenue for state services and be better received by Oregon voters. They included:

* Re-examine corporate tax breaks and repeal those that aren't cost-effective in promoting good jobs for Oregonians. If the proportion of taxes breaks to overall taxes at the state and local level had remained constant over the last two years, we would have an additional $1.5 billion to support services this biennium.

* Equalize corporate income tax rates (now 6.6 percent) with personal income tax rates (now 5-9 percent), so that corporations pay the same taxes on their profits that workers pay on their wages. This is a matter of equity for small businesses as well, since most pay the higher personal income tax on their profits as partnerships and sole proprietorships. This would raise approximately $230 million in the next biennium.

* Establish a statewide property tax on non-residential properties. This would make our tax system more stable and restore business support for schools to levels in effect in the mid-1990s - when businesses were thriving in Oregon. At a rate of $3 per $1,000, about one-fifth of the current rate at the local level, this would raise approximately $645 million in the next biennium.

And though disappointed in the defeat of Measure 28, the state labor federation noted that the campaign coalition connected union members with seniors, school supporters, advocates for the disabled and the mentally ill and community activists.

"We all became brothers and sisters in this campaign," Nesbitt said, "and we'll need your solidarity and commitment in the months ahead."

February 7, 2003 issue

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