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Mark Shields: Oregon Raises Taxes, Makes Some History
In politics, the winners get to write the history. When Republican Scott Brown, in an authentic upset on Jan. 19, won the special election to fill the Senate seat held for 47 years by the late Sen. Ted Kennedy, D-Mass., the victors told us that the Brown victory unmistakably proclaimed the electorate’s anger with one, or more, of the following: President Barack Obama, his health-care plan, the recession, Washington and its condescending indifference to ordinary citizens, Big Government, Big Deficits, Big Taxes, bailouts, Democrats and liberalism.
Barely one week later — before the ink was even dry on the new, global meaning of Massachusetts — voters in Oregon did what they hadn’t done in 80 years: With their state suffering under an unemployment rate of 11 percent and facing an estimated budget gap of $727 million, Oregonians, with an impressive 60 percent of them turning out — by a thumping 54 percent majority — endorsed an increase in the statewide income tax and raised the Oregon corporate tax rate.
Oregon voters are seriously tax-adverse. In the first state to make political decisions through direct democracy by ballot questions, Oregon voters have on nine occasions voted against imposing any state sales tax. Oregon is one of only five states without a sales tax. The last tax increase to win support was in 2002, when, to help pay for the Oregon Health Plan, the state’s voters upped the tax on cigarettes. Since then, two statewide income tax hikes have been rejected at the polls.
So what does this entirely unorthodox “tax revolt” in Oregon mean? According to one of the winners, Steve Novick, 2008 Democratic Senate candidate and advocate-strategist for the winning “Vote Yes for Oregon” campaign, “Massachusetts was about (voters’) anger” over how “messed up things were.” Voters there demanded “to hold the people in charge responsible.”
In Oregon, he says, “voters agreed things are messed up and we are going to do something about it.” What they did was raise the state income tax rate on the fewer than 3 percent of Oregon households that earn more than $250,000 a year or individuals who earn more than $125,000 annually. The state’s corporate tax, where two-thirds of the state’s firms pay the minimum tax of $10 (yes, 10 dollars!), also was boosted.
Arguing that without the new taxes, the cuts to the 93 percent of the state budget devoted to public education, public safety and public safety net for children and seniors would be painful and unfair, the proponents — well-funded by teachers and public employee unions, and backed by a wide array of religious and civic groups — demanded that “big banks, credit-card companies and the rich pay their fair share.”
One TV spot consisted of separate indictments: Wall Street took billions of dollars in bonuses; bankers jacked up our credit card-rates; a lot of state corporations pay only the $10 corporate tax. Images of CEOs in private jets and luxury drove the message.
Veteran Oregon political strategist Pat McCormick, who opposed the tax hikes in the business-backed “Oregonians Against Job-Killing Taxes,” conceded the winners “effectively tapped into populist anger.”
Will success in Oregon — just for starters — embolden the Obama administration and Democrats in Congress to regulate, let alone tax, Wall Street and to make sure the Bush tax cuts for high-earners expire?
Kevin Looper, who managed the winning campaign, believes others will take courage from what Oregonians did.
“We registered 30,000 young voters, knocked on 300,000 doors, and we embraced people where they live,” he said. “To make ours a better place, we all need to be less selfish.”
Now that’s a really different idea!
— Mark Shields is one of the most widely recognized political commentators in the United States. The former Washington Post editorial columnist appears regularly on CNN, on public television and on radio. Click here to contact him.
Comments
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» on 01.30.10 @ 09:54 PM
Great, now Oregonians will suffer the same fate as California. To bad they do not understand economics as well as the do class warfare. Same goes to Shields, who sees this as a victory for his warped suicidal ideology. The timber industry will stay but they will pass the new tax on to everyone else, a little talked about effect of raising corporate taxes, we pay them not the corporations, idiots. Those industries that don’t have to stay will do as they did here and pack up and leave.
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» on 01.30.10 @ 10:05 PM
Tax the rich! That’s the ticket to prosperity. Seems to me that if under 3% of Oregon families earn over $250,000 a year, you’d probably need to tax them at 100% or more to make up that shortfall. But what do I know, I live in California.
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» on 01.31.10 @ 04:18 AM
A dispatch from Oregon.
What Shields doesn’t tell you here is that the pro-tax forces lied. He admits that the pro-tax forces used images of corporate jets, flown by fat cat Wall Streeters. What he doesn’t say and what pro-tax advertising didn’t say is that there are few jet-setting Wall Streeters in Oregon.
Most Oregon business is of the small variety. Small businesses will be adversely impacted by this tax hike. There were almost immediate reports of tax related layoffs. Chicago—and even worse nearby Vancouver, Washington—announced plans to recruit Oregon businesses.
So, please tell me. If this tax was only going to hit the state’s rich Wall Streeters, why were small businesses so opposed to it?
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» on 01.31.10 @ 07:26 AM
So An50, we should never tax corporations because under your warped logic they would just pass it on to everyone else. Did you know that Goldman Sachs paid taxes at a rate of .6% and that the average S&P 500 corporation, which includes many in California, paid at a rate of 13%. To me and others this just is not fair. I applaud the Oregon taxes.The industries in Oregon will not pack up and leave. That has shown to not happen just like trickle down economics that you and others advocate. What you do not seem to understand is that you can not have your cake and eat it too or you get what you pay for. California has traditionally under taxed corporations. Look at the income and property tax numbers over the past 30 years and you will see that corporations are paying less and less of their gross income. To close both the State and Federal Budget I would:
-Raise taxes on the highest income bracket back to pre-Bush Senior levels
-Have a variable gas tax that is higher when prices are lower and lower when prices are higher. It would smooth out the gas price at the pump and collect billions per one cent.
-Hire 100,000 more IRS agents and audit like crazy and collect the $500 billion a year that is cheating
-Reduce our military spending by 10% accross the board, this would add over $100 billion per year
-Add more medicare and medical fraud investigators with the aim of eliminating the $50 billion per year lost in the system
-Have a minor equities transaction tax
-Have a supplemental tax on the largest banks
-Take steps to eliminate any tax advantages that Fannie and Freddie have with securites and government backing and privitize or eliminate
-Standardize the mortgage industry’s loan requirements
-Introduce a means test for Social Security such that the wealthy you do not need it do not receive it
-Slowly raise the age at which one is eligible for Social Security
-Downsize many departments in DC such as Homeland Security and Health
-Provide the President the line item veto to cut out pork
-I would eliminate the 2/3 rule to raise taxes in California and I would remove corportations from Prop 13 and move them to a 1/2% prop tax based on current market value
-I would introduce large tax incentives for hiring new workers and starting up of any manufactoring activities
-We should get tough with the Chinese and require that they raise their currency to true market levels and eliminate their large tariffs on imports.
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» on 01.31.10 @ 09:12 AM
To the previous commenters who apparently don’t know Oregon in the least: Oregonians may have a history of “hating taxes,” but what they dislike more is unfairness. They also understand the long term value of educating children and that the future goes to those who prepare well. Oregon legislators already had to make substantial cuts to education last year, and voters showed their support for “no more cuts” to public education.
Even with the tax increase on corporations, they will still be paying less tax than they would in most other states—so they won’t be moving anywhere. And the $10 minimum had been in place since 1931 - as many business people who supported the increase pointed out. Same with families making more than a quarter million/year - the effect of the raise is truly marginal, about 1% of earned income.
Oregon is a long way from being the nearly ungovernable place that California is, so save your tears for yourselves.
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» on 01.31.10 @ 11:49 AM
I would leave and let oregon government unions pay the price for class envy—If you can move—move and teach the government employee’s a lesson—They don’t want to make cuts like you and I..Unions are to blame again—bust the unions in gov—they have no place in America—Leaders are their paid off sock PUPPETS…....
Business will go underground—
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» on 01.31.10 @ 04:02 PM
Now that SCOTUS has declared that corporations have the same rights as humans, why should Oregon corporations have to pay even $10 in taxes? when human Oregonians pay no income tax at all? Pretty outrageous; they should CUT that $10 tax on corporations and fire a few humans instead.
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» on 02.01.10 @ 07:39 AM
Hey Amend 17, have you heard about the new election campaigns that SCOTUS has caused? Walmart is running for Senator in Georgia, Apple in California and Procter, Gamble in Ohio, Exxon in Texas and Merck in New Jersey. Based on this ruling we might as well have complete transparency.
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» on 02.01.10 @ 10:17 AM
local - You have an interesting idea, and it all fits in with how important it is to repeal the 17th amendment. Walmart , Apple, Procter & Gamble, Exxon and Merck are mostly well run companies, so why not have them run the government, via the state legislatures, like companies used to? Another example: a day’s admission to Disneyland costs less than an average day’s taxes, just work it out. Disneyland is much better organized and pleasant than what the government does. So why don’t we just have Disney Corp. run things? It would be cheaper and a lot more fun.
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» on 02.01.10 @ 10:42 AM
Local, try, and I know this will be hard for you, but do it anyway, try to think logically and not idealistically. The tax you extract from corporations does not come out of their profit margins. Corporations, particularly those who are publically traded, are highly regulated institutions. Cash flow, EBIT, expenses, capital outlays are not contrived arbitrarily. They are determined by markets and regulation, stock holders and business strategies. When economic ignoramuses who follow blind party ideology just decide to raise taxes its sets off a whole chain of events that are designed to preserve profit. If the market cannot absorb the added cost of taxes then other methods are used, most likely moving operations to a cheaper labor market. If no other options are available and the general manager cannot maintain a profitable business unit, it is liquidated.
Because ideological zealots do not understand business they often make stupid claims about profit and greed that are just untrue and usually their animosity toward business results in that business being done elsewhere. The tax the Oregonians have levied against their own source of livelihood will result in more business losses and a resulting lower revenue stream to government. JFK understood this as did Reagan and bush. Take care of your profit centers because that wealth they make pays the dam bills. When you kill profit you kill wealth generation and poverty is right around the corner. None of what I said here is meant to be partisan, though we both know which party is about profit killing, but instead it is about economics and how it works. You socialists and Keynesians, ever consider that redistribution or monetary movement might be better if the wealth pie were growing rather than shrinking? If that confuses you check out what China already knows and has done something about.
For you Oregonians who bought this tax I pity you. You have a perfect example of what an unmitigated disaster over taxing your economy is right to your south here in California. You ignored that and now you will all pay as Californians are today. God help you.
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» on 02.01.10 @ 12:28 PM
AN50, I do understand business at a much greater depth than you apparently. By the way Reagan raised taxes 7 times. I am simply taking your insane argument to an extreme level. The question was whether we should just eliminate corporate tax altogether because it is just passed through? You did not answer. I believe there is room at the corporate level to absorb more taxes without a pass through or margin sqeeze. Corporations today are in the best cash flow and free cash position ever. This is evidenced by the historical low tax pay rate by corporations today as compared to the past, including your hero Reagan. Get it???? Do some research and look at the top 10 corporations in America, specially what they pay in taxes then come back and discuss this intelligently and not in terms on Milton Friedman or trickle down economics.
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» on 02.01.10 @ 02:47 PM
Once again, everyone seems to group business as a whole. People’s frustrations towards a handful of corporations cause all businesses to be treated like villains. Small businesses are negatively affected by these taxes just as large businesses are. I can also guarantee that our small business pays WAY more taxes than the numbers i see thrown around in the comments here. There is already no incentive to start a business these days, lets not make it any worse.
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» on 02.01.10 @ 10:00 PM
Wait till those young voters start making money! And you can forget about small businesses hiring new employees now, not to mention new “migration” to Oregon. They may like that idea—until it crushes their real estate values.
Dis-incentivize people and you get… California’s mess! Exactly who the Oregonians say they hate most!
Oh, wait, did this vote happen because a bunch of liberal Californians cashed out of LA/SF, took their money and ran to Oregon? Has someone tracked this trend???
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» on 02.02.10 @ 03:20 PM
The Oregonians are really dumb—almost as foolish as liberals in Calif—tax and spend fools..union puppets in control of our leaders—bad for us..
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» on 02.02.10 @ 04:18 PM
“Local” has a pretty long list of reforms but seems to be leaving out public pensions and benefit reform.
Maybe he/she works for the state/county/city.
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» on 02.02.10 @ 08:09 PM
I do not work for any government. I agree pension and benefit reform is a good one to add to the list. I would also release many non-violent criminals from prison that were busted for a minor marijuana possesion and put them in rehab. That would save $40k per year per person. Why not look at tort reform and the high cost of malpractice insurance. The profit on malpractice insurance is very high because a case is rarely paid.
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