A Few Dollars More for a Few Good Causes

Steve Novick

This week the Legislature will vote on proposals to limit the severity of the cuts we are going to see in education, health care and public safety by raising more revenue from corporations and the wealthy.  I wish legislative leaders well in rounding up those votes. (Message to any legislator who voted for the gas tax: There is no political reason to vote no now. If you’re going to lose your next election on taxes, you’ve already lost.  Voting to raise the gas tax is a lot more politically dangerous than voting to raise taxes on wealthy individuals and corporations.  So you might as well vote to save schools and seniors.) 

I write today to suggest that the Legislature go a little bit further in terms of revenue-raising, taking some small, politically easy steps to address a few low-budget but important causes.  I propose that we stop giving a tax break to companies that export jobs and money to overseas tax havens; that we limit the Oregon Lottery’s tavern subsidy program, by adopting the suggestions of auditors and of Governor Kulongoski; and that we stop subsidizing wealthy Oregonians’ campaign contributions.  I propose that we use a fraction of that money to bring Oregon’s rape laws into the 20th (not 21st) century; to restore the state teacher mentoring program to the level originally proposed by Governor Kulongoski; and to avoid cuts to the Healthy Start program, which helps to prevent child abuse before it starts. Since these revenue proposals would raise about $75 million, and these three causes would cost less than $12 million, there would be $63 million left over to help balance the budget.

I should note that I am mimicking, and in part duplicating, an exercise the Oregonian did with a few of its writers a few weeks ago. Newspapers are good things. Don’t let them die. Anyway:

First of all, it’s outrageous that because of a fiscal impact of a less than a million dollars over the next four years, a bill to bring Oregon’s rape laws into the twentieth century is now blocked.  Current Oregon law, as my friend Sue Castner observes, “rewards rapists for good victim selection.”  As the Oregonian put it:

“A young woman at a college party gets drunk and blacks out. Then she's raped.

“Oregon is one of 18 states where prosecutors and courts are allowed to consider how she became intoxicated. Did she drink too much? Did somebody slip a drug into her beer?

“It matters because, under current law, if a woman is incapacitated by her own actions, the person accused of attacking her could be charged only with sex abuse in the second degree and not with the more serious crime of first-degree rape or sex abuse, which carry mandatory minimum prison sentences.

A bill generating much debate in the Legislature would change the law so that it wouldn't matter how a rape victim became vulnerable to attack.”

Attorney General John Kroger rightly thinks that it sure as hell shouldn’t matter. "In the last 50 years, we've seen dramatic change in the law throughout the United States in which the focus of attention is no longer on the victims, their conduct, how they are dressed, and shifted solely to the perpetrators," Kroger has said. House Bill 2343 would modernize the law.  But it’s bottled up in Ways and Means because of a fiscal impact of $125,000 in 2009-11, moving up to $700,000 in 2011-13.

Where could we get the money?  Well, how about limiting the political contribution tax credit, phasing it out for taxpayers making over $100,000?  The tax credit will cost $15 million in 2009-11. We know that more than half of it will go to households making over $70,000. So I bet at least a sixth will go to households making over $100,000. So there’s $2.5 million – enough to py for fairness to rape victims, with plenty to spare, 

Then there’s the teacher mentorship program,  (I’m stealing this, in part, from Betsy Hammond at the Oregonian.)  We know that many teachers have a tough time in their first year.  We lose a lot of teachers in their first few years. A mentorship program, linking new teachers with experienced teachers who provide them advice, guidance, support, has had promising results.  Governor Kulongoski proposed $10 million for the mentorship program for 2009-11. The co-chairs budget cut that to $2.5 million. 

Where could we get the $7.5 million? How about cutting the payments the State Lottery makes to tavern owners for housing video poker machines?  The Lottery money is supposed to be used for education (and economic development).  A 1994 audit said that the video poker taverns would be doing fine if they got 15% of the profits.  Governor Kulongoski echoed that recommendation a few years ago. One tavern owner once described the ‘work’ tavern owners do with respect to video poker as: “you take the money out of the machine, You go and put it in the bank.”  Currently, according to the Oregonian, the tavern owners are getting 24% of the take – about $80,000 per tavern per year, totalling $162 million last year.  The state’s contracts with the taverns are up for renewal in the middle of next year.  If the Legislature passed a law limiting their take to 18%, that’s $40 million. Plenty for mentorship.  With lots left over.

Finally, let’s talk about the Healthy Start program – a program that identifies ‘at-risk’ families of newborns and sends social workers out to lend support and parent education. Though these families have been flagged as especially at risk for abuse and neglect, the incidence of abuse and neglect in Healthy Start families is smaller than in the general population. But the legislative meat-axe is going to cut the program by 20% - $4.2 million. 

Where can we get the money? How about disconnecting Oregon from the part of the Federal tax code that rewards companies for shifting jobs and income overseas?  As the State’s Tax Expenditure Report explains:

"When a U.S. firm earns income through a foreign subsidiary, the income is exempt from U.S. corporate taxes as long as it is in the hands of the foreign subsidiary. At the time the foreign income is repatriated, the U.S. parent corporation can credit foreign taxes paid by the subsidiary against U.S. taxes owed on the repatriated income. Because U.S. firms can delay paying U.S. taxes by keeping income in the hands of foreign subsidiaries, it provides a tax benefit for firms that invest in countries with low tax rates."

Tax experts say that often companies artificially inflate the percentage of their profits earned in low-tax countries through something called ‘transfer pricing’ – playing games with the prices that the American branch of the company and the foreign subsidiary charge each other for intra-corporate transfers of goods and services. That’s one of the reasons Senator Wyden has proposed ending the Federal deferral. But Oregon doesn’t have to wait for that: It can ‘disconnect’ from the Federal law – and raise $33 million. Plenty for Healthy Start, with lots left over. 

I should note that there’s little or no, or even negative, political cost to these proposals.  Subsidizing the political contributions of the wealthy, and subsidizing sending money overseas, aren’t exactly popular causes.   The Oregon Restaurant Association won’t like cutting the tavern subsidy, but they don’t like Democrats anyway,

By Steve Novick June 08, 2009