NY Times Looks at Oregon's Revenue Solution for Revenue Problem: Measures 66 and 67
Chuck Sheketoff
The New York Times has an article about Measures 66 and 67 in the Sunday paper.
It is not surprising that The New York Times is devoting some ink to the issue (PDF). Other states' legislatures see Oregon's revenue solution to its revenue problem as a model.
The article begins by telling America and the world that in Central Point the school district this fall cut back to a four-day week because of the revenue shortfall, and that it will get even worse if Measures 66 and 67 fail.
Pollster Tim Hibbitts apparently thinks a cute little poem explains what the legislature did with Measures 66 and 67. But of course just as he was wrong when he was arming the Oregon Business Association and others in 2009 with polling data to support the corporate groups' tax plan that taxed every Oregonian, every small business owner and every corporation, his poetic explanation for what the legislature did is wrong, too. It is cute and simple, but misses the point. Hibbitts apparently is as blind as the big corporations he works for to Oregon's growing income inequality and tax system that asks more of low- and middle-income households than it does of those at the top.
The legislature recognized who were the big winners during the upturn and who was still doing well despite the downturn. Knowing that Oregon's tax system asks the least from those with the most and the most from those with the least (i.e., it is regressive), the legislature followed the advice of leading economists and adopted modest tax increases on those with the greatest ability to pay.
Hibbitts says the measures "were crafted pretty cleverly politically." I say they were smart and just what Oregon needs.
Measures 66 and 67 protect small businesses (the corporate Oregon plans had higher taxes on small businesses) and they protect middle class and vulnerable Oregonians. The measures recognize a few pennies from a poor woman's purse cost her more than a few pieces of gold from a rich man's horde. So unlike corporate Oregon's prescription for tax reform, Measures 66 and 67 are targeted at those who are doing well in this economy and who can easily afford to pay a little more.
Read the article after the jump.
January 24, 2010
Tax Increase for the Rich Is at Issue in Oregon
By WILLIAM YARDLEYCENTRAL POINT, Ore. — Few places have felt the twin challenges presented by Oregon’s broken state budget and its knotted tax system the way this old farm town has.
Facing $3 million in state cuts and no way to raise money, the school district here cut back to a four-day week last fall. Teachers cram in curriculum. Parents juggle child care. Students sleep in on Mondays.
“The three-day weekends are nice,” said Joe DeFranco, who teaches at Mae Richardson Elementary School here, “but academically, we’re strapped.”
Still more cuts will come unless revenues rise. On Tuesday, voters here and across Oregon will have the chance to make that happen when they decide the fate of two ballot measures that would raise taxes on higher-income residents and on businesses to help pay for public education and other services. Known as Measures 66 and 67, the votes are referendums on $727 million in tax and fee increases that were approved last year by the Democratic-controlled Legislature.
Yet if the measures pass, it will probably not be because of support here in largely conservative southwest Oregon. Too many times the state has proposed too many taxes, many residents here say, and this is no exception, never mind the school troubles.
Instead, experts say, if the measures pass it will be because Oregon lawmakers found a way to narrowly focus a tax increase that more liberal parts of the state could tolerate, even at a time when a tax increase could not be harder to digest.
What happens here may be closely watched elsewhere. While tax increases are probably coming in plenty of other states, most by executive or legislative action, Oregon will be the first this year to ask voters to raise taxes on themselves — or at least on some of themselves.
“What’s the saying? ‘Don’t tax me. Don’t tax thee. Tax the man behind the tree?’ ” said Tim Hibbitts, a longtime independent pollster in Oregon. “The measures were designed and have been sold with the idea that somebody else is going to pay, people who are high-income earners and businesses.”
Mr. Hibbitts added, “They were crafted pretty cleverly politically.”
Supporters, led by teachers and public employees’ unions, point out that the income tax increase affects less than 3 percent of the population: individuals who earn more than $125,000 a year. They say the state’s wealthier residents should pay more to help those with less. They also say that state businesses enjoy a relatively low tax burden and that most small businesses will pay only $140 more in fees.
Opponents say the proposals are the wrong fix at the wrong time. State income taxes for wealthier Oregon residents are already among the highest of any state. But the most notable opposition may have come from powerful business groups and prominent executives like Phil Knight of Nike, which is based near Portland.
Oregon unemployment is at 11 percent and new taxes will make it even harder to hire, opponents say. They say that supporters are underestimating how many people would be affected, and that while some of the increases are scheduled to fade out, some are not.
Complicating matters further, the Legislature has essentially already spent the $727 million in projected revenue by incorporating the anticipated tax increases into the current budget. If the measures fail, lawmakers will have to make new cuts or find another way to raise revenue.
What many people on each side agree on is that, recession or not, Oregon’s tax system is flawed and that passing Measures 66 and 67 is not a long-term solution.
Oregon is one of only five states with no state sales tax, and voters have repeatedly rejected ballot initiatives to create one. In addition, a statewide cap on property taxes limits how much local governments can raise rates each year.
Here in heavily forested Jackson County and in several others, there is another wrinkle. Property taxes were historically low here in part because the counties received payments from the federal government for timber production on federal lands. Yet timber production has declined substantially, and subsequent federal subsidies have not compensated for the decline. That aid, too, is set to phase out.
John W. Tapogna, a former economist with the Congressional Budget Office who now leads an economics consulting firm in the Pacific Northwest, said the situation facing counties in this part of Oregon could soon become a crisis that might help force the state to look more broadly at its tax structure.
If that happens, Mr. Tapogna is among many people who believe that the first order of business should be to do away with Oregon’s so-called kicker law, a unique instrument among states and one that underscores Oregon’s distaste for taxes.
When times are good, the state sends kicker refunds to residents from revenue that exceeds forecasts by state economists. In December 2007, just as the country was entering the recession, Oregon returned $1.1 billion to residents, bounty from the previous boom year, because of the kicker law. By the spring of 2009, as Oregon’s unemployment rate was on its way to becoming one of the highest in the nation, the Legislature was voting to raise taxes by $727 million, the increase now before voters.
“On the one hand, we are handing big checks back, and then we’re saying we don’t have enough to pay for services,” Mr. Tapogna said. “It’s an absurd process.” In 2007, the checks averaged about $600 per taxpayer, substantially more than previous kickers had averaged.
He added, “The point is, regardless of what happens on Jan. 26, the system is broken, and there’s an awful lot of work left to do.”
Charles Sheketoff, executive director of the Oregon Center for Public Policy, which advocates for lower-income people and helped shape the tax proposals, said he also wanted to do away with the kicker and build a rainy day fund. But he said the state also needed to close more of what he called corporate tax loopholes.
Asked about the wisdom of raising taxes in a recession, Mr. Sheketoff pointed to a widely circulated paper co-written several years ago by Peter R. Orszag, now the White House budget director, that said focused tax increases on higher-income earners do less overall economic damage than steep spending cuts.
While the measures on the ballot Tuesday are not long-term solutions, Mr. Sheketoff said, they are a “first, important and necessary step.”
“It only asks a little bit more from the fortunate few who did well during the last upturn and are still doing well today,” he said. “If you’re going to raise taxes, do what’s fair and equitable and right.”
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Jan 24, '10
Chuck Sheketoff posted: Pollster Tim Hibbitts apparently thinks a cute little poem explains what the legislature did with Measures 66 and 67.
That 'cute little poem' has been around since about the time of the nation's founding... and it's dead-on in this situation today regardless how much you try to talk around it or what you might say otherwise.
If you want to argue why the taxes are 'smart and just what Oregon needs', fine... but don't insult everybody's intelligence trying to deny political calculation didn't enter into the way these tax increases went down. At least the NY Times had the good sense not to try to tell that to America and the world.
Jan 24, '10
Good article. Really good, neutral presentation. Much better than either side here have done. Shame, shame, shame! Is that what folks mean when they say it's a good paper? They don't yield to petty bias? Guess I'll have to wait 'til Mother Jones covers it to get some decent long-range analysis.
Hey, can BO do ANYTHING without a snarky aside? Do BO writers ever miss a cheap shot at someone you disagree with? Obviously you don't like Hibbitts. That's your problem. It has nothing to do with the story. His quips support you, capiche?
Seriously, how are you any different than the troll that shows up to say "Comrade" every time Jenson (and you sometimes) post, or Jack Blog chiming in just to say "Fireman Randy"? Just like them, you couldn't see Hibbitts' name in writing without a knee-jerk comment. Now that's interesting. I remember a little exchange last week between Zara and LT about Hibbitts. It was pretty good, and I went back to cite it, and Z says BO deleted his response. Typical. I feel a psychic moment...LT will make the same comments here, uncontested. Oh, another vision coming...BO hates him because he called a contest against their side. Hey! Do you understand his job? Would you care to name a pollster in the PNW with a better track record? If you don't like political tracking pols, ban them. Cut the snarky whine already.
It's pretty damned obvious that the self-appointed guardians of the measures at BO are green with jealousy that THEY weren't asked to be the talking heads. Rail against talking heads, if you like, but as they go, can you not see Hibbitts is a damn side better than constant quotees, like that failed drug czar Barry McCafferry? You know how you get to be an expert witness in court? You have a history of being an expert witness. Period. Same with talking heads. Media to media call, who's your talking head on polls...Tim Hibbitts. Novick may be the much more logical choice, but he's not on the list. Yes it would be wonderful if next time they talked about Afghanistan we heard a respected military historian instead of a failed drug czar, but that isn't how American journalism works. You know what a pollster makes? And he's kept his virtue unsullied. As this country goes, thats pretty damned good.
BTW, if you're going to speak ex-cathedra and never read the comments, then close it to comments right off. Save us from all the link spammers that BO obviously can't deal with, "Comrade", and another 50 recitations of what happened in the Oregonian!
Jan 24, '10
My wife and I moved to NY from Oregon a few years back, and love keeping up on the news on Blueoregon. The tax measures don't exactly make us wish for home, tho. Of course it was great seeing home news in the Times.
I'm interested in the NY Times' timing of this. It seems they are avoiding the controversy that the Oregonian got caught up in by waiting until now. If the Oregonian wasn't trying to influence the outcome, why didn't they do that? Is SW Oregon conservative? I always thought that if it was coast it was cool. It is so good to hear mature political debate coming out of the State. We have gotten used to that here, and it's nice to see the rest of the country following suit. We brag about the initiative process, but when it produces something like this, it's hard to hold your head high. Let's get this chapter behind us!
We miss Timmy too. Quintessential Oregon, so it is sad to see him dissed. JJ is right. There definitely was a comment a week ago on the Spadeagate post, that had a pretty good take on old Hibby. I think it might have gotten deleted because it dissed the princess, saying "Kari's little attack dog". We distincly remember it because later in the week my wife called her "Toto".
Jan 24, '10
Hibbitts says the measures "were crafted pretty cleverly politically." I say they were smart and just what Oregon needs.
Hibbits was being diplomatic. The measures are a sly, cynical attempt to turn voters against each other through greed, fear, and manipulation.
Pro 66/67 ads state that those making less than a certain amount won’t see any increase in their taxes and that only the “Rich” will pay more. So am I supposed to feel good about someone else paying my fair share of government services? Where is the responsibility or honor in that? How civic-minded is that?
These measures divide and pit Oregonians against each other at a time when we all are hurting. They are unjust, unfair, and should be defeated.
Jan 24, '10
For the record, Redmond schools are also on a four-day week. For many years people have said, "As California goes, so goes the nation." Oregon should take a pass on that. Tuesday will tell if it will.
Jan 24, '10
We hear a lot from yes, yes, yes, and a lot from no, no, no, but how many are yes/no or no/yes. Most I think.
Jan 24, '10
Seem to remember Hibbits running around during session with cooked up numbers trying to convince everyone that these measures would fail miserably.
So now he says that the measures were crafted well politically.
...because no one listened to him.
Jan 24, '10
Everytime one of you anti-tax fairness advocates at BO post a piece on 66/67, I've pointed out that the top 2% pay more than 1/3rd the State's cost. This is a FACT and it gives lie to the irresponsible untruths presented on this blog. Your presentation is clearly a lie but, you continue. This is the mentality that drove me from the left, if you guys are right, why do you have to protect your truth in a shroud of lies?
Geoff
Jan 24, '10
BTW, if you're going to speak ex-cathedra and never read the comments, then close it to comments right off. Save us from all the link spammers that BO obviously can't deal with, "Comrade", and another 50 recitations of what happened in the Oregonian!
That is such a good point.
Posted by: Geoffrey Ludt | Jan 24, 2010 10:56:45 AM
Everytime one of you anti-tax fairness advocates at BO post a piece on 66/67, I've pointed out that the top 2% pay more than 1/3rd the State's cost.
Sorry, Geoffrey. Chuck has left the building. Case in point.
Jan 24, '10
Bill Bodden commented: For many years people have said, "As California goes, so goes the nation." Oregon should take a pass on that. Tuesday will tell if it will.
Right... California crippled its tax base over a period of years by gradually increasing taxes on businesses and 'the wealthy' - sparking a gradual exodus of the same as a result. Leaving a state on the verge of bankruptcy with a growing tax base of low-wage workers and thus unable to fund the towering pile of unwisely promised social spending programs and other commitments promised in balmier days.
In the immortal words of Bette Davis: 'Fasten your seat belts, it's going to be a bumpy night...'
Jan 24, '10
In the immortal words of Bette Davis: 'Fasten your seat belts, it's going to be a bumpy night...'
Right. There are good problems and bad problems. A bumpy night with Bette Davis is a good problem. This ain't.
Jan 24, '10
Geoffrey, your stat is meaningless.
What percentage of the states income is made by the top 2%? What percentage of the states income above the poverty line is earned by the top 2%?
Jan 25, '10
alcatross:
California crippled its tax base over a period of years by gradually increasing taxes on businesses and 'the wealthy'...
Sir, you could not be more wrong, and this outrageously false claim serves to discredit everything you say.
Initiatives passed years ago require a 2/3 majority of the CA legislature to pass a budget. Even with a Democratic majority, getting 2/3 requires a lot of Republicans, who are all hell-bent on protecting the wallets of the wealthy elites and rich corporations at all costs. With a series of Republican governors, raising taxes on businesses and the wealthy has been impossible for generations. To suggest that this political structure produced tax creases on the wealthy demonstrates a truly astonishing degree of ignorance.
In fact, California has been DECREASING taxes on the wealthy and businesses for generations, while increasing taxes and fees on the middle class, defunding government services, and borrowing to fill the gaps. Now 10% of their budget goes to pay interest on their debt, and they have no way out. That's where we'll be if we fail to make rich corporations and wealthy elites pay their fair share of the tax burden.
Sorry if all of these facts hurt your brain. I'm sure soon enough you'll find a bunch of other hogwash to build your case on though.