Oregon’s ‘massive’ corporate tax increase on November ballot divides state, interest groups

With Washington facing tough school-funding decisions in 2017, a look south at the Measure 97 can be instructive. The Oregonian says 

Measure 97 would raise $3 billion a year in corporate taxes from about 1,000 firms with in-state sales of more than $25 million a year. If voters approve it, a substantial amount of the money is expected to be plowed into education, from preschool through universities, and public employee unions, including the teachers union, are expected to fund most of the pro-97 campaign.

As we wrote last May,

AP quotes the Tax Foundation as saying the measure would give Oregon “the worst corporate tax climate in the country.” The campaign is expected to be, well, vigorous.

Unions and business are lining up for what’s been described as political World War III over the measure.

The debate has become intense. In The Oregonian a former Oregon teacher of the year writes, 

The gross underfunding of our kids’ education is simply unacceptable…

Oregonians pay their fair share to students. Big corporations should, too.

Measure 97 simply asks some of the largest companies to do just that, moving Oregon from dead-last in corporate taxes in the nation. Only 1,051 corporations will be affected, yet the measure is estimated to generate $3 billion dollars a year, meaning we could start putting our students, and not corporations, first.

Pretty tough language, but reminiscent of some of what we’ve heard said here on occasion. (And that bit about “asking some” to pay more is always just a bit disingenuous, as if those asked could say ‘no’ without repercussions.) The problem, of course, is that not all of those 1,051 will leave their business model unchanged or remain open in Oregon. Even one of the nation’s – or at least one of the Northwest’s – iconic book stores is worried. 

Powell’s Books is the largest new and used bookstore in the world, but its owner says she’s worried a measure on the November ballot could make it a thing of the past.

The board chair of the Multnomah Education Service District identifies other, presumably unintended, impacts. Read the whole thing; it’s very good.

It likely means higher prices for groceries, gas, medical expenses and other basics. Because of the compounded nature of the tax – which taxes gross sales of Oregon businesses, not gross profits – businesses will be left with no choice but to either raise prices or slash jobs. Or both…

 And I’m a nonprofit executive director. Beyond the negative impacts of Measure 97 on families and our economy, there’s an entirely unstudied series of negative impacts from the measure looming for the nonprofit sector. Just as the cost of business will go up for businesses, which will pass it along to the consumer, the cost of doing business – especially our core operational expenses – for nonprofits will rise, as well. The local nonprofit agency I lead serves people with disabilities. Where will we find the revenue to account for these rising costs? Surely we won’t pass it along to our underserved clients?

Mainstream business groups are mounting a vigorous campaign against Measure 97. The Oregonian also points out

Not surprisingly, the [proponent’s] report never mentions one big reason that Oregon schools are so short-staffed: Oregon school employees are treated to exceptionally rich benefits, including super-generous retirement plans for employees hired before 2004 and excellent health benefits with little of the cost paid by employees.

The report also focuses heavily on per-student funding in 2012-13, when Oregon schools were still in a recession-driven money crunch. Back then, Oregon’s per-student spending was about $9,500, which was 11 percent lower than the national average.

The Oregon Legislature has since voted for substantial increases in school funding, but the federal government has yet to issue updated state-by-state figures.

Add to that this editorial observation on the economic claims made by Measure 97 backers, claims that made it into the voter’s pamphlet.

But the committee declined to mention the dampened growth, higher consumer prices and increased utility bills that state economists predicted in May. Instead, the summary takes a conservative approach, simply warning of indirect economic effects that are “indeterminate.” At the same time, the committee boldly overstated the spending authority of the measure.

A lot of money will be spent on both sides of this measure that has cleaved the state, heightening the usual tensions between business and labor groups. 

Washingtonians may see Measure 97 as an economic development initiative for our state. Possibly. Ideally, however, it’s not a preview of coming attractions as policymakers approach 2017 and the obligation to fund fully basic education.