Public employee union backers of Initiative Petition 28 have turned in more than enough signatures to place their massive 2.5 percent gross receipts tax measure on Oregon’s November ballot.
While supposedly dedicating most of the $6 billion per biennium additional tax revenue to public education, health care, and senior services, in reality legislators would be under pressure from powerful lobbyists in the Capitol to substitute at least some of this new revenue for money they would otherwise dedicate to those services. In short, the loudest voices in Salem, not voters, will ultimately control where this extra tax money goes.
While the unions portray their measure as making large, out-of-state corporations pay their fair share of Oregon taxes, the nonpartisan Legislative Revenue Office has released a detailed report giving a much more balanced perspective, which includes:
■ IP 28 will increase state and local taxes by $600 per year on average for every man, woman, and child in Oregon, totaling over $6 billion each full biennium.
■ IP 28 will dampen income, employment, and population growth over the next 5 years. In fact, it is expected to reduce employment growth by more than 20,000 jobs over the next five years, with private sector job growth slowing while public sector job growth accelerates in order to spend all that new tax money.
■ IP 28 will hit lower- and middle-income Oregonians harder than it will affect high-income earners. In other words, it is a regressive tax.
Perhaps most telling, the Legislative Revenue Office concludes that IP 28 will act largely like a consumption tax. It estimates that roughly two-thirds of that $6 billion per biennium tax increase will be passed on to Oregon consumers in the form of higher prices. Another name for a consumption tax is a sales tax.
The reality that IP 28 would effectively be a sales tax should be a lesson for all Oregonians that businesses generally don’t pay taxes, people do. Even the largest corporations are made up of people, namely employees, and sell their goods and services to other people, namely customers. It is largely these two groups of people who pay so-called business taxes like the one that IP 28 would impose.
The backers of IP 28 certainly understand that it is really a tax on people, not corporations. But, it is harder to get voters to approve a tax measure when they think it will hit them with rising prices at the store and fewer job opportunities. Better to promote the fiction that big faceless corporations have some magic pots of money that they will simply hand over to state government and public employees without any consequences for the rest of us.
Public employee unions back IP 28 because most of the tax revenue it would generate will go into the pockets of their members. Once the rest of us realize that this money will come primarily out of our pockets, we might not be too excited about voting for this massive new money grab.
Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in The Coos Bay World on June 1, 2016.
1 Comment
I hope you will ask the supporters for this measure to provide a rebuttal to Buckstein’s piece so that you can print it in the interest of equal treatment of this issue. Voters need information from both sides of this issue in order to make an informed choice, don’t you agree?
Buckstein’s contention that raising taxes on corporations is a “sales tax” is a real stretch. Corporations that make huge profits have choices-they can make a little less money for the good of society or they can pass the taxes they pay on to their customers. If one accepts the notion that higher corporate taxes will inevitably lead to higher consumer prices then one must also subscribe to the theory that if corporations payed no taxes at all then consumers would see significant reductions in the cost of products they buy. I don’t don’t buy this, do you?
I urge anyone reading this to take a careful look at what this measure actually does as opposed to the “sky is falling” rhetoric coming from it’s critics. The initiative petition was very short and simple. It clearly states that only corporation making $50,000,000 or more in revenue would pay the extra 2.5% in taxes. Yes, that’s $50,000,000….hardly the sweeping sales tax that critics like Buckstein would have us believe it is. Check this out if you want the facts: http://abetteroregon.org/initiative/.
Oregon’s corporate taxes are among the lowest in the country. Critics of this measure don’t think that huge corporations such as Walmart, Comcast, or Bank of America should pay their fair share of taxes in Oregon. Apparently, they’d rather pass the buck to us individual tax payers. After all, these huge companies aren’t Oregon corporations. Why should they care about the quality of life here?