What is the Oregonian Pushing For? What the Business-Backed Tax Plans Would Mean for Small Businesses and Middle Class Oregonians.
Steve Novick
For the past three weeks, the Oregonian’s editorial board has hammered away on a single theme: Voters should reject tax increases on large corporations and the rich, and legislators should return in February to adopt tax proposals being pushed by the large business associations. But what the Oregonian hasn’t mentioned, even once, is what those proposals would mean for middle-class families and small businesses.
So, to help focus discussion on what the Oregonian is advocating, the following is a breakdown of the tax increases proposed by a coalition of associations that includes the Association of Oregon Industries and Associated General Contractors, leading funders of the opposition to Measures 66 and 67, and by the Oregon Business Association. (By the way, as you may know, I am working for the 'Yes' campaign.)
In short: the business associations proposed across-the-board tax increases that would raise taxes on the middle class and on small businesses, while large corporations and the rich would have paid less. If Measures 66 and 67 fail, these presumably are the plans that the Oregonian would have the legislature reconsider.
Author’s note: OBA has
contacted me to say that their plan would have been revised to raise less money
overall after the May 2009 revenue forecast. So the 1% across the
board tax increase on all taxpayers would have been slimmed down to something less.
OBA also said that most of their energy was directed toward developing the
business tax increase plan; the personal tax increase proposal was not the
focus of their efforts. That does not change the fact that since their
business tax plan raised only a fraction of the money needed to balance the
budget, personal income tax increases would have been necessary – and OBA’s
proposal (whether well-thought-out or an afterthought) was to raise taxes
across the board on everyone. So although it
is reasonable to assume that a revised OBA proposal may have included smaller
tax increases on middle-class families than
their initial proposal, it is equally reasonable to assume that it would have
continued to include middle-class tax increases.
The AOI plan called for raising income taxes on every family that makes more than $15,200 in taxable income, raising the corporate minimum to a flat $300, and increasing the tax on all corporate profits, regardless of size. But during the legislative session, AOI and their partners would only agree to a such a deal in exchange for cutting the capital gains tax by 44%, taking over $500 million out of the 2011-13 budget. In simpler words, they want middle-class families to pay more now in order to reduce taxes for the rich later.
Because small business owners generally pass their tax liability through their personal return, both OBA’s and AOI’s across-the-board increases would raise taxes on small business owners. Measures 66 and 67 protect most small business owners by holding their corporate minimum at $150 and only applying tax increases to household income above $250,000.
The Oregonians Against Job Killing Taxes campaign has spent months running a purposefully misleading campaign. But here’s their single biggest hypocrisy: The alternative plans to raise taxes would have done everything they falsely accuse Measures 66 and 67 of doing.
If either of these plans had been adopted, small bakery owners really would have seen their taxes increase, soccer moms really would have to pay more. There really would have been a tax increase on small agriculture businessmen in Ontario and, of course, dairy farmers in Tillamook. Now, the Oregonian wants voters to reject the targeted tax increases in Measures 66 and 67, and seemingly wants the legislature to adopt across-the-board tax increases on struggling families and small businesses instead. We believe voters strongly disagree with them.
For an even more detailed break down of the OBA and AOI's proposed tax increases, click here (pdf)
Click here to download the AOI Tax Proposal (pdf)
Click here to download the OBA Proposal (pdf)
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Jan 17, '10
Damn. This is really useful, but really disturbing. Those guys really do want to have the little guy pick up the tab.
No wonder business taxes are so low in Oregon: they keep pushing it all off on individuals. Its diabolically perfect from their perspective, though: then middle class voters get upset and reject anything with the word tax on it when it comes time to rebalance the burden.
I hope voters see through the smokescreen this time around. I for one voted YES.
Thanks, Novick.
Jan 17, '10
If you read the O's editorial today, what I think they are asking for is the Gov and Legislature for once to show some responsibity and start bdugeting accordingly.
This is a patch and we'll need another tax in two years when we'll hear the refrain (like for the past 20 years): "If you don't give us more taxes, we'll close schools."
A YES only postpones this eventuality and makes it even harder by waiting longer to address it. They can cut, if anything Ted's limitless supply of $100K/yr jobs for his friends.
Jan 17, '10
Hey Steve, Don't pick your nose with your hook. You might rip your face off!
Jan 17, '10
All well & good but who do you suppose will wind up paying the lions share of this new tax revenue? Surely you understand that any added costs of doing business are ultimately shifted to the end user. Uniform changes to tax policy makes that easy as no direct competitors are exempt.
In the end it all comes down to whether one believes the proposed state budget increases are critical at this time or not. If so, voting yes on both measures is the correct answer. Either way, it's not going to kill the state or business even though neither are doing so hot. Just don't be naive enough to be convinced that increasing taxation on someone else will have no effect on you.
Jan 17, '10
The No on 66 & 67 crowd are a real classy group.
Steve - Thank you for all you do for Oregon. Very informative post as always.
7:15 p.m.
Jan 17, '10
As I've done presentations on the measures, I've been blown away by the ideological business owners who complain about Measures 66 and 67 yet refuse to acknowledge what their associations -- AOI, OBA, OGC, NFIB, ORA, etc. -- were offering up worse plans. As tough as those crowds are when only a few out of 100 will pay additional taxes, I can't imagine talking to them if all of them would see their taxes go up under one of the business associations' plans. I'd love to see The Oregonian's publisher and editorial board defend their plan to real people, not just in print.
On September 4, 2009, AOI's J.L. Wilson sent me an email saying "The Alliance proposal was never formally endorsed by the respective associations, so that is not a public document. In short, we put together a proposal that would support a temporary 2-year increase in personal and corporate tax rates (as well as an increase in the corp minimum to $300) in exchange for a reconnect to the federal tax code and a reduction in capital gains taxes."
Why The Oregonian insists that there's a unified business plan and that it is politically viable baffles the mind.
Jan 17, '10
I've been terribly confused as to how these were 'job crushing taxes', honestly.
It looks like for ever job it might crush, it saves taxes for 150,000 Oregonians.
But I don't have much trust in the electorate of late, many who think of Oregon as their home have had to leave to find work and places to live. My childhood home has a tiny fraction of the people it did when I was a child, even while the state has grown overall.
Jan 17, '10
Maybe when Sheketoff and Novick own a business should they be taken seriously.
Pick pockets & Socialist whiners!
7:45 p.m.
Jan 17, '10
While I knew the drift of this I wish I had these facts earlier. The next time my Republican business friends try to tell me that it was all the Dems fault for not doing what the business groups wanted I now have the facts to tell them to get real.
Jan 17, '10
Thanks Steve for the great information! Thanks for all you do for Oregon!
Jan 17, '10
Steve, thanks!
It is no wonder the refrain was "the legislature should have approved our plan!" rather than telling us the details.
Amd Jim D, if you are saying only business owners have the right to comment on business plans, what does that make AOI, OBA, etc.?
Outside of lobbyists, how many people do they employ? What product do they sell?
Members of my family have owned businesses, and I know there are lots of factors ( incl. a low priced competitor) which influence business.
From what I have read, far from every business in the state is in the No camp.
Jim, how big is your business, where is it located, what is your product?
Jan 17, '10
Steve,
Thanks for this eye-opening info on the parasitic tax goals of the corporate shills, which I have not seen mapped-out before in this degree of detail. Their slogan: "We don't pay taxes: taxes are for the little people."
And thanks to Chuck for his informative note.
It's amazing that even here on this progressive blog, there are trolls who jump in and repeat the same empty right-wing tax slogans, as though you never laid out this damning information for all to see. But don't let the b*s get you down, and keep up the good work.
Jan 17, '10
Italics be gone!
Jan 17, '10
Great post. My understanding is that in addition to wanting to raise taxes on middle income Oregonians and small businesses significantly higher than those proposed in 66 and 67, the so called business lobby could not even deliver one single Republican vote for their tax proposals, let alone a super majority in either the House or the Senate.
These guys are running the worst scorched earth campaign ever trashing Oregon's business climate. Kind of ironic that the state's leading business organizations are spending millions to trash Oregon's business climate instead of telling people what a great place Oregon is to own a business. Morons.
Jan 17, '10
John Calhoun...
I saw the debate between you and Bob Wiggins on Straight Talk. With due respect to you and your service to our community, I thought that even though Bob won the debate on a point-by-point basis, he also prevailed on making the broader point of why M66/67 are so deleterious to Oregon... a point echoed by every major newspaper editorial board in Oregon... a point drove home in no uncertain terms by Phil Knight.
I've been in high tech for so long that I simply grin when others manipulate "facts" to fit a point of view. It's easy to spin-up a spreadsheet and say "SEE YOU WON'T PAY A NICKEL MORE!" when all the time those facts don't add up to the truth (Bob's math lesson) and belie the overall context of the situation (Oregon's fragile economy and economy future).
There is no doubt that we all care about Oregonians, education and social services for each and every person in need. I hope that as this conversations progresses, we can also agree that Oregon employers are the economic engine that produces the tax receipts which pay for those vital services.
Respectfully. ThinkOregon.
Jan 17, '10
And yet Phil Knight, fuonder of Nike ripped into the democrats in Salem todaty for their tax moves. This was the same guy lionized here on BO recently for selling so much stock and sticking around even though he will get taxed out the wazoo for doing so.
Phil Knight to Oregon democrats - I wouldn't start NIKE here in Oregon today.....
10:32 p.m.
Jan 17, '10
What was Bob's math, exactly? He took a tiny slice of the taxpaying universe in Oregon--and noted a tiny slice of the new tax burden. Only 100 companies will pay around 3% of the total tax increase, when they represent something like .0003% of all businesses? OK, then. And he totally ignores all of Measure 66!
Jan 17, '10
torridjoe ... are you making my point for me?
Jan 17, '10
Great post, Steve. You have a knack for going right to the heart of the matter.
The poorest 20% of individual taxpayers in Oregon pay an average of 9% of their income to cover state and local services (schools, police & fire, courts, senior services, environmental protection). Meanwhile, because of federal and Oregon-specific deductions and credits that were larded into the tax code during the '90's and early '00's, the wealthiest 20% of taxpayers pay an average of about 7% of their income to support those same state and local services. Even when the voters ratify M66, the poorest among us will still pay a higher burden to support their neighbors than the wealthiest.
May I suggest that we think a bit differently about this whole "fair share" issue. Families earning more than $250,000 (along with individuals earning more than $125,000) may be a relatively small group if you're just counting the number of people. But they earn nearly 30% of the personal income earned in Oregon. So why shouldn't they pay about 30% of the tax on income. Would anyone seriously propose we fund our common needs with a head tax?
Same holds true for business taxes. Currently, the smallest companies bear a higher rate of tax than the very large national and international companies. M67 closes that gap some, but not completely.
If you haven't volunteered yet to help, please sign up at www.voteyesfororegon.org .
11:51 p.m.
Jan 17, '10
I thought the finest rebuttal to Phil Knight's rant in today's Oregonian was in a new blog I happened to Google into. I shared it this afternoon with Novick: The Green Butt Skunk.
11:55 p.m.
Jan 17, '10
Let me try again The Green Butt Skunk.
(If the link doesn't work, you owe it to yourself to cut and paste it into your browser.)
Jan 18, '10
Excellent question, Mary.
Here's some information you might find interesting... from Oregon Department of Revenue statistics, Personal Income Tax Statistics for tax year 2007 (most recent data available), see in particular Exhibit 11 in that document:
The top 1% of filers by AGI, representing about 18% of the income, had 25% of the tax liability in 2007.
The top 5% of filers by AGI, representing about 33% of the income, had over 42% of the tax liability in 2007.
The top 20% of filers by AGI, representing 60% of income, had over 69% of the tax liability in 2007.
So you can see that those at the top of the earning scale are paying disproportionately more of the tax burden than their actual income would otherwise indicate.
And as for the argument that people at the top pay a smaller percentage of income than those at the bottom, here's the breakdown of aggregate tax liability as % of AGI for each group:
Bottom 20% paid 4.1% of AGI Next 20% paid 3.2% of AGI Middle 20% paid 4.3% of AGI Next 20% paid 4.7% of AGI Next 15% (81-95% bracket) paid 5.5% of AGI Next 4% (96-99% bracket) paid 6.7% of AGI Top 1% paid 7.7% of AGI
So apart from the quirk about the bottom 20% paying more than the next 20%, you can see that the higher the income level, the larger the effective tax rate.
The numbers are available for anybody to look at and analyze for themselves. Oregon clearly already has a significantly progressive income tax system.
Not that people here are generally inclined to let the facts get in the way of a good story, but those facts, they are stubborn things. :-)
Jan 18, '10
I used to buy Nike shoes, every year I would get an expensive new pair as they wore out quickly. I assumed that was the norm for shoes, but for some reason about 10 years ago a I bought a pair of Rockports. They cost the same or less, and interestingly, I still wear them. I haven't bought Nikes since, and I doubt that I will ever buy Nikes again.
Nike is a house of cards waiting to topple, as they don't sell a quality product and tastes change. Mr. Knight made a fortune on the backs of cheap Asian labor and fad-conscious college students. He's into exploitation and self-aggrandizement. A real prick, actually.
Jan 18, '10
I'm a-goin' canvassing tomorrow morning. This is one fight we cannot afford to lose, folks. The Oregonian has really been flogging their readers to vote no. Hopefully the Steven Newhouse-owned rag's reactionary stance has lost them at least a few thousand subscribers.
Jan 18, '10
The third comment by Mr. or Ms. Anonymous is inexcusable. I apologize, Steve, on behalf of this totally offensive person.
9:13 a.m.
Jan 18, '10
I liked the link Les sent us to (http://gbskunk.weebly.com/)...the only thing I'd also add is that Phil wrongly claims he's the only Fortune 500 company in Oregon...and The O put that in a pull quote yesterday. Both Phil and The O know Precision Castparts is the other.
Tiger Woods' poor judgment may be a bigger financial threat to Nike than any tax matter the Oregon legislature has ever considered.
9:54 a.m.
Jan 18, '10
Excellent graphic Steve.
You've totally convinced me to vote "yes", but both the wife and I have already sent our ballots in.....
Dang...
Jan 18, '10
The Oregonian's opposition to M66 and M67 is astounding. Multiple editorials, followed up with Phil Knight's myopic views -- he points to the differences in the OR and WA tax systems??; uh, Phil, WA has a sales tax.
But really, how can the Oregonian be punished? Cancel a subscription? It just means you lose one good source of information. Boycott its advertisers? That's most every major business in the city.
Jan 18, '10
If your job already has been crushed, 66 will give you a tax cut, as the first $2400 of unemployment insurance benefits will be exempted from taxes.
That's what Steve Novick and other Yes on 66 people should point out - that if your job already has been "crushed" by rich individuals and corporations, that you'll get a tax cut because of 66.
Jan 18, '10
Monday, January 18, 2010
The Consumer Care Corporation today endorsed a No vote on Oregon Ballot Measures 66 and 67, citing the negative impact the measures will have on consumers.
The commercials on TV from both sides can be very mean spirited when the issue being considered is very simple. Consumers should be told the simple facts so they make an educated decision.
This is a tax against REVENUE verses the current INCOME tax.
Business REVENUE is what a business records as its sales of all of the products and services it sells. The business must then subtract from this revenue all EXPENSES related to running that business. This includes the products it resells, the rent it pays and the employees it needs to operate. After these expenses are subtracted, the business may or may not have INCOME.
The businesses that will be most adversely affected are grocery stores, gasoline stations, department stores, clothing stores, restaurants, car dealerships, and others who have relatively high revenue, high expenses and only 1-5% left for income.
If a tax takes any portion of their revenue before they have a chance to pay their expenses, they will raise prices, then let people go and finally, if they can they’ll leave Oregon.
Jon Nigbor, Consumer Care’s founder said, “We believe consumers don’t want higher prices, fewer jobs and fewer employers. Groceries, gasoline and living expenses are high enough and the existing INCOME taxes work”.
“Ads that claim Nike and Intel don’t pay taxes are absurd. They do and in ways a 30 second commercial can’t explain. We appreciate the tax base these companies provide and hope they remain in Oregon for a long time”.
Consumer Care Corporation has been based Oregon since 1991 and promotes consumer safety and well being. Thousands of consumers have benefited from Consumer Care’s work.
Jan 18, '10
A lot of really mean comments have been made throughout the course of the campaign by people on both sides of these measures. Although it doesn't deserve a response, the third comment (by "anon") is just too far over the line. (Blue Oregon, you should have deleted it.) To the person who would write something like that, I can't see how you would ever look back and be proud of what you said. And if you're trying to help the no campaign, that wasn't helpful. Bob Wiggins
Jan 18, '10
Aaron V - If your job already has been crushed, 66 will give you a tax cut, as the first $2400 of unemployment insurance benefits will be exempted from taxes.
Reality - This is actually a tax cut given by Obama at the federal level. Since Oregon cut itself off from automatic ties to the federal tax regulations and caps federal tax deductions at the state level at abnormally low levels, this "tax cut" could have been done in any number of ways without cunically placing it in tax increase legislation certain to be challenged. It was sor tof a reverse poison pill so to speak....
12:02 p.m.
Jan 18, '10
Bob,
Thanks for your comment. I will mention it to Steve.
12:04 p.m.
Jan 18, '10
But really, how can the Oregonian be punished?
By passing the ballot measures!
Jan 18, '10
How about a civic statute that makes leaving more than a one page flier at your door littering? Those Dex non-phonebooks and "complimentary" copies of the O are just a waste of trees.
As for being a good source of information, if you take out the editorials and the pieces inspired and promoted by developers and the travel industry, I don't see much left, and almost none of it qualifies as "must read".
Actually, vis a vis all those discussions about why print media is failing, I don't remember a really obvious factor being mentioned. Namely, the classifieds used to sell mega Sunday paper volume; now most people look for jobs online. Corporations that disagree with the editorial position could send a strong message, with little or no personal downside, by pulling any classifieds they may still have at the O.
Jan 18, '10
Bob Wiggins, you and I have both agreed on something! The third comment was definitely over the line.
Jan 18, '10
Actually, according to the online version of the article, Mr. Knight wrote that only "One Fortune Global 500 company remains."
Precision Castparts is in the Fortune 500, but not the Fortune Global 500. Nike barely makes it on the Global list at #497. So Mr. Knight is absolutely correct.
Jan 18, '10
Wow, Les Aucoin shared a blog address with Steve Novick. Important stuff
Jan 18, '10
These tax and spend bastards in Salem need to learn that not all working people get annual pay increases. Any new taxes or fees and my family will be forced to leave the state. We work hard for our paychecks at a small agribusiness and don't get regular raises. I add that we are caucasian, born and raised American citizens , in case somebody wanted to read something more into this. We are in our mid-late 50's. I hate new or realigned taxes of any sort, but let's get some equality in the system.
Jan 18, '10
Ron Stacy,
What's remarkable to me about comments like yours is it's clear you didn't read the post, at all. Those "tax and spend" types in Salem? Actually, they are the business lobby.
The Oregon Business Association wanted to tax YOU more so someone very wealthy would pay less. The AOI wanted to tax small and start up businesses more, not less.
Look at your own house, for once, before throwing stones at ours.
Jan 18, '10
Ron Stacy, If you're taxable income is less than $250,000 ($125,000 if you file single), and by your description I'd bet you fall into that category, your taxes are increased by $0 and you get a tax break if you collected unemployment during the year.
Business taxes are increased by a maximum of 0.15%*, that's $1.50 on $1000 of gross sales in Oregon. Most businesses with more than $150,000 in gross will pay less than 0.10% in increased taxes.
It seems a small price to pay to keep schools and prisons and other state services from being cut further. If it costs me a buck more for my next $1000 of groceries I don't mind.
*Businesses with less than $100,000 in Oregon sales will pay an effective rate higher than 0.15% but if you can't afford the $150 tax I wonder how viable your business is.
Jan 18, '10
Semantic point: Rangerhunter nails it! THAT is the essence of trolling. Not being disagreeable or gratuitous douchebaggery, even, but purely seeking a defined target and using a discussion as a place to post an a priori sentiment that isn't responsive to the conversation. I know I'm being "stupidly naive" or "pitifully idealistic" again, but could we use it that way?
Jan 19, '10
So great post ! I get a lot of good info from your post. So smart !
Jan 19, '10
VOTE YES FOR 66 AND 67.
not the way to go, as these People are the Backbone of the Economy as they provide employment for the oregonians. I am a building Contractor, if this measure Passes, I will not do the construction which my plan was to employ 60-75 people over the next 12 months.
And why give raises to Government employees only, When private Oregonians are without a JOB
Jan 25, '10