January 15, 2010 Volume 111 Number 2

'No' campaign overlooks the most basic facts of Measures 66/67

On Jan. 26, Oregonians get to decide whether corporations and the rich should pay a little more in state taxes. But “No on 66 and 67” television ads, funded by corporations and rich individuals, make it sound like the tax increases affect ordinary people. “Tell state government to tighten its belt like the rest of us,” says the latest. In another, an actor pretends to worry about “retroactive taxes.”

The ads are paid for by a business-funded coalition that had raised $3.58 million as of Jan. 4. After the Oregon Legislature passed the increases in June, the business group paid signature gatherers to refer them to voters.

But organized labor is defending the increases, which are the first major move toward tax fairness in decades. The increases amount to no more than 2 percent of a part of the incomes of the richest 2.5 percent of Oregon taxpayers — and $150 for most corporations doing business in the state.

Labor’s involvement is making it an even fight. No labor organization in the state is opposing the measures.

To crunch numbers and rebut opposing arguments, the labor-backed coalition Vote Yes For Oregon hired tax policy analyst (and former U.S. Senate candidate) Steve Novick. Novick, whose father and brother were union organizers, took time last week to answer questions from the Labor Press.

Will these tax increases “kill jobs?”

In terms of creating jobs, what you want is more money spent in the Oregon economy. The money raised by these tax measures, plus federal matching funds that we’ll receive, will be spent by teachers, home health care workers, and nurses in the local economy. By contrast, rich people tend to spend some of their money on European vacations or investments in the New York Stock Exchange. On the corporate side, most of the biggest checks will be written by large out- of-state corporations, from Eli Lilly to Proctor & Gamble, to Chase Bank.

Will rich people move away and take jobs with them?

What you have to imagine is that a friend of yours comes up to you and says, ‘Well, it’s been nice knowing you, but I’ve been offered a job in another state with a pay increase of 1 percent, and I just can’t turn that down.’ If you look at the hundred richest ZIP codes in America, 30 are in California or New York, some of the highest tax places. The fact is, rich people like to live in nice places. And Measures 66 and 67 will help preserve Oregon as a nice place.

What about the argument that state shouldn’t be increasing spending during a recession?

Let’s look at the ad they have on right now, which says that state spending has gone up by $4.7 billion: 75 percent of that is the federal government gave us more money for unemployment benefits, food stamps, and Medicaid for people who’ve lost their jobs and health insurance. What do they want us to do, throw the money back and let people go hungry?

What about the public employee salary increases?

Here are the facts: State employees are getting $22 million in step increases, and giving up $51 million by having furlough days. So state employee salaries are actually going down.

Will this hurt small businesses?

First of all, 93 percent of small business owners don’t make enough money to be affected by Measure 66. Most of the 7 percent that are affected are people that don’t actually make their money from the small business. If you’re rich, people ask you to invest in stuff: If you’re a Nike exec and your aunt Carol asks you to invest in her bakery, you show up on the books as a rich small business owner. Then there’s 2 percent of small business owners that are rich enough to pay the tax, and actually do make most of their money from their small business. But under the definition both sides use, that includes law firms like Stoel Rives. How could a small business owner make that much money [$250,000]? They’re trying to confuse people into thinking that the small business owners are taxed on the gross income of the business. Actually, they’re only taxed on their share of the profits, which means what they take out after they pay wages and other expenses. So the idea that this tax will cause them to lay people off is ludicrous.

But it’s retroactive. Is that fair?

The taxes were passed in 2009. The reason they’re not collected until 2010 is the opponents gathered signatures to force a vote. They have this argument that money hasn’t been withheld from paychecks. You’re talking about rich people, most of whom make the biggest chunk of their money from capital gains, not paychecks. They’re aware this is going on. They’ve got tax planners. It’s not like they’re going to be stuck at the end of the year with this huge tax bill that they can’t afford. The same goes for the corporations.

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