Unpacking Oregon’s State Budget and Fighting the Austerity Agenda

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Mark Brenner

Plan for the Day

• Where Does Oregon Spend its Money?
• Where Does Oregon Get its Money?
• What Are Some of the Problems with Our Revenue System?
• Corporate Taxes
• Personal Income Taxes
• The Kicker
• What Can We Do to Fix Those Problems?

$9.5 billion

$11.2 billion

$4.3

billion

$3.5

billion

$1.2

billion

$926

million

$492

million

Admin.

$21.2 billion

$7.6

billion

$3.8

billion

$2.6

billion

$764

million

The Lottery Now Brings in More than Corporate Taxes

Projected 2021-23 Biennium Revenue

($ Billions)

Corporate Taxes

Oregon Has the Lowest Corporate Taxes in the U.S.

How to Fix Corporate Taxes

1. Change Minimum Corporate Tax from a Flat amount to percentage
2. Get Rid of Corporate Subsidies like Opportunity Zones and Enterprise Zones
3. Calculate Corporate Taxes on Global Operations, not Just U.S. Activity

Adjust Minimum Corporate Tax

Get Rid of Corporate Giveaways

$214,056,435

$80,940,943

$54,344,000

$24,427,961

$13,189,209

$9,451,039

Enterprise Zone Tax Credits

2007 to 2020

Get Rid of Corporate Giveaways

Trump-era opportunity zone tax breaks are draining millions from schools and local services. In Portland, 40% of real estate development between 2015 and 2019 were in opportunity zones.

Personal Income Taxes

Incomes for the Super Rich Take Off

Oregon’s Billionaires Raked it In During the First Year of Pandemic

Phil Knight

Timothy Boyle

Made $21.2 billion

Made $1.2 billion

How to Fix Personal Income Taxes

1. Raising the current top tax rate to 11 percent for joint filers with income over $250,000 ($125,000 for single).
2. Add a new “Millionaires” Tax Bracket at 13%.
3. Address Capital Gains.

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The Kicker

Oregon’s Forecasts Were Way Off

Oregon underestimated revenue by 25% during the 2021-23 biennium!

What is the Kicker?

Oregon kicker is one-of-a-kind tax rebate system.

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If tax revenues collected during the biennium exceed the forecast in the legislatively approved budget by 2% or more, then they are “kicked” back to taxpayers.

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The kicker is not a result of taxpayers overpaying their taxes—it’s a forecasting error.

Short History of Oregon Kicker

• The kicker has “kicked” in 13 of the past 21 biennial budgets, draining $11.1 billion from the Oregon state budget. 
• There has been a kicker in every biennial budget since 2011-13.
• Over the last three biennial budgets, the kicker has been more than 15% of budget.

What’s The Kicker Impact?

Property Taxes

Remember The ‘Tax Revolt’ of 1970’s?

Howard Jarvis, a lobbyist for the Los Angeles Apartment Owners Association, leads the push for Prop 13 in California.

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The ballot measure won with 65% of the vote in 1978.  

Did you know Oregon had its own version of Prop 13 in 1978? Measure 6 lost narrowly, with 51.7% of Oregonians voting no.

1979 Legislature Responds to ‘Tax Revolt’

• Personal income tax rebate
• 30% property tax relief package
• Limited assessed property value growth to 5%
• Appropriation growth limit
• 2% surplus kicker

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Radical Right Fans the Anti-Tax Flames

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Grover Norquist Americans for Tax Reform

Oregon’s anti-tax organizing was supported by national organizations like Americans for Tax Reform, with intellectual ammunition provided by think-tanks like the Cato institute. These organizations drew on theories from ‘public choice economics’ a school of thought popularized by James Buchanan and other conservative economists. For more details, read Democracy in Chains by Nancy MacLean.

Key Moments in Ongoing Tax Revolt

1990

Measure 5:

Capped property taxes

dedicated for public services

What has this meant for state budgets and public services?

1996

Measure 25

Required a supermajority for new revenue

1997

Measure 50

Reduced property taxes and limited their future growth

2000

Measure 86

Put the 2% Kicker into the Oregon constitution

1995

SB 750

Limited what union members can bargain over as “mandatory subjects.”

Measures 5 & 50 Cut Property Tax Revenue, Especially for Big Business

Shifted Taxes Off Corporations onto Us

The Arc of History Bends Towards Justice

In 2000, Oregon Taxpayers United convicted of money laundering and in 2010 Anti-tax activist Bill Sizemore convicted of tax evasion

Tax Policy as Racist Dog Whistle

“In Chicago, they found a woman who holds the record. She used 80 names, 30 addresses, 15 telephone numbers to collect food stamps, Social Security, veterans’ benefits for four nonexistent deceased veteran husbands, as well as welfare. In fact, her tax-free cash income alone has been running at $150,000 a year.” – Ronald Reagan, 1976

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“Today we have an historic opportunity to make welfare what it was meant to be: a second chance, not a way of life.”

– Bill Clinton, 1996

Making Tax Limits Permanent

46 states have adopted some form of property tax limit since 1978.

• Prop 13 in CA
• Measures 5 & 50 in OR
• The Headlee Amendment in MI
• Prop 2 ½ in Massachusetts.

30 states have adopted some form of tax expenditure limit:

• AZ caps state expenditures at 7.4% of personal income.
• CO Taxpayer Bill of Rights limits spending growth to sum of population + inflation.

Broke on Purpose

What’s Is To Be Done? Part I

• In 1991 the state legislature voted to revise the revenue forecast essentially suspending the kicker (2/3 majority required).
• In 2012 Measure 85 passed, diverting the corporate kicker to K-12 education spending.
• OCPP is proposing a “Working Class Kicker” which would change the rebate method and redistribute the same amount to all Oregonians.

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What’s Is To Be Done? Part II

• Millionaires Tax – Massachusetts raised $2 billion with this measure.
• Split Roll Tax – California’s Prop 15 lost narrowly.
• Corporate Transparency – Minnesota lawmakers proposed measure to prevent corporations from hiding profits overseas
• Excise Tax on Stock Sales – Washington will raise ½ a billion from a new tax on sale of stocks.
• Targeted Program Funding – Portland voters approved an income tax on high earners to fund Universal Pre-School. Colorado voters approved Prop FF to fund universal free school meals.

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What’s Is To Be Done? Big Picture

In 1971 Lewis Powell, a lifelong Democrat who went on to be appointed a Supreme Court Justice by Richard Nixon wrote a manifesto to the business community:

“The overriding first need is for businessmen to recognize that the ultimate issue may be survival―survival of what we call the free enterprise system, and all that this means for the strength and prosperity of America and the freedom of our people.”

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“The day is long past when the chief executive officer of a major

corporation discharges his responsibility by maintaining a satisfactory

growth of profits ….. If our system is to survive, top management must be equally concerned with protecting and preserving the system itself.”