By Don McIntosh, Associate editor
1. The Back Story (aka, How Oregon Got Into This Mess)
Twenty-six years ago, Oregon voters passed Ballot Measure 5, by 52 percent. Measure 5 limited property taxes to 1.5 percent, and shifted school funding responsibility from local school districts to the state. Many who voted for Measure 5 in 1990 felt property taxes were too high, and wanted the Legislature to find other sources of revenue. But voters rejected the 5 percent sales tax that lawmakers sent to the ballot in 1993 — by a three-to-one margin. That was followed by measures 47 and 50 in 1996 and 1997, which reduced “assessed” property values by 10 percent, and limited future increases in assessed value to 3 percent a year regardless of how much market value increased.
2. Some of the Damage Measures 5 and 50 did to Oregon
It’s been 20 years since Measure 50 passed. Together, the property tax limitation measures fed a long slow decline in schools, along with occasional acute budget crises. Today, Oregon has the nation’s third-largest class sizes, the fourth-highest high school dropout rate, and some of the nation’s shortest school years — on average two weeks shorter than the 180-days-per-year national standard. Oregon today has one guidance counselor for every 549 students, one school librarian for every 674 students, and one school nurse for every 4,635 students. And pinched school districts have deferred and deferred building maintenance —a backlog that reached $7.6 billion statewide by 2014.
“Drive by any school and take a look,” said Portland Public Schools electrical union rep Donna Hammond. “We’re talking superglue and bandaids.”
Only once in the last two decades has the legislature tried to come up with additional revenues to offset the reduced property taxes: Measures 66 and 67, which voters passed. Pitched as rescue measures in 2010 during the height of the recession, 66 and 67 slightly (and in some cases temporarily) increased income taxes on corporations and on the top 2 percent of income earners. That might have been as far as state lawmakers were willing to go, but it wasn’t enough to solve the longterm revenue problem. Before Measure 67, many big corporations paid just $10 a year in taxes. But even after, some companies with over $100 million in sales (including 78 of them in 2013) paid just $100,000 or less in state taxes.
3. Finally, A Solution
Now Measure 97 is on the ballot. Measure 97 is the first time Oregon voters have been given the option to raise taxes on the biggest corporations on a scale that could turn around schools’ 20-year decline.
How it works is pretty simple: Corporations doing business in Oregon would pay a minimum corporate income tax equal to 2.5 percent of all in-state sales over $25 million. That simple change would raise an estimated $3 billion a year — increasing state revenue by nearly a third. That’s roughly equal to the revenue lost by Measures 5, 47, and 50.
And the tax would hit some taxpayers that have had it pretty easy. Only the top one quarter of the top 1 percent of companies doing business in Oregon will pay this tax — about 400 companies in all. In inflation-adjusted dollars, Oregon’s corporate income tax is generating about as much as it did in the 1970s, even though personal income tax revenues have tripled since then. Oregon today has the lowest effective corporate tax rate in the nation. (See chart below.)
But many of the biggest corporations doing business in Oregon would like to keep their taxes low. As of Oct. 20, when this was posted, corporations had reported over $18.3 million in contributions to the No on 97 campaign. [UPDATE: As of Nov. 2, it topped $25 million.]
That kind of corporate money pays for a lot of ads, but by and large it’s paying to spread disinformation, doubt and fear about the measure. The Labor Press takes those arguments apart at Five corporate lies (and two truths) about Measure 97. Read that, and you’ll see why union members and working people have every reason to vote for the measure, and to be proud of union effort that went into it.
WHICH SIDE ARE YOU ON?
AGAINST MEASURE 97: Who’s opposed to big corporations paying higher taxes? Big corporations, for starters. See the whole rogue’s list of contributors here.
FOR MEASURE 97: Over 400 businesses have come out in support of union-sponsored Measure 97, as well as hundreds of elected officials, economists, farmers, community and faith leaders, and unions and non-profit groups. See the whole list here. Portland-area businesses are here.