OCT. 2, 2009 :NWLP
9/29/09
9:53 AM
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Through ballot referenda
Business groups force vote on tax hike on corporations and the rich
It appears Oregon voters will get the
final say on whether the state’s wealth-
iest individuals and corporations
should pay just a little more taxes. The
Democratic majority in the Oregon
Legislature this year passed laws in-
creasing the $10 corporate minimum
income tax and adding a new top per-
sonal income tax bracket on house-
holds with over a quarter million dol-
lars a year of income.
The amounts of the increase were
quite modest, but some Republican ac-
tivists formed a group called Oregoni-
ans Against Job Killing Taxes and
raised and spent nearly $1 million from
business groups to fund a paid signa-
ture gatherer operation. The group
turned in signatures Sept. 25. If the sec-
retary of state finds there are at least
55,179 valid signatures on each meas-
ure, voters will choose in a Jan. 26,
2010 special election whether to let the
tax increases go forward.
A “yes” vote is a vote for the in-
creases. Or, as Scott Moore —
spokesperson for the union-backed
community coalition Defend Oregon
— put it, “Vote yes for tax fairness.”
Oregon’s corporate minimum in-
come tax has been something of a scan-
dal for years. Two-thirds of corpora-
tions doing business in Oregon —
including some of Oregon’s biggest
corporations — have been paying only
$10 a year in income tax, an amount
that hasn’t been raised since 1929. The
corporate minimum is the amount of
income tax paid by corporations whose
books don’t show a profit in a given
year. Under the new law, the corporate
minimum increases to $150 a year for
corporations with under $500,000 a
year in Oregon sales, rising to
$100,000 for companies with more
than $100 million a year in sales.
The non-profit think tank Oregon
Center for Public Policy found that
even with the increase, corporations
will still pay a smaller share of taxes
than three decades ago. When the cor-
porate tax measure takes full effect in
the 2013-15 budget cycle, corporations
will pay 6.8 percent of the state’s in-
come taxes, with individuals paying the
remaining 93.2 percent. The corporate
share is 6.3 percent now; 35 years ago
it was 18 percent.
Meanwhile, Oregon’s personal in-
come tax has been essentially a flat tax
of 9 percent on the taxable incomes of
all but the poorest. The new law tem-
porarily raises the top marginal rate on
taxable income to 10.8 percent for
household incomes over $250,000, and
11 percent on taxable incomes over
Oregon’s minimum wage to stay at $8.40 next year
Due to a decline of 1.48 percent in
the Consumer Price Index (CPI) from
August 2008 to August 2009, Oregon’s
minimum wage will remain at $8.40 an
hour next year.
Enacted by voters in 2002, Oregon’s
minimum wage law requires an annual
adjustment based on inflation as meas-
ured by the CPI.
The commissioner of the Bureau of
Labor and Industries (BOLI) is charged
with adjusting the minimum wage for
inflation every September, rounded to
the nearest five cents. The law specifi-
cally ties the minimum wage to in-
creases in the CPI, leaving no option
for a reduced wage when the CPI de-
clines.
“While the economy still struggles,
workers will be able to continue taking
care of their families while maintaining
their purchasing power and contribut-
ing to the recovery,” said Labor Com-
missioner Brad Avakian. “At the same
time, employers who are in difficult fi-
nancial situations can breathe a little
easier because their labor costs will re-
main constant.”
Oregon is one of 10 states, with
Washington, Vermont, Ohio, Nevada,
Montana, Missouri, Florida, Colorado,
and Arizona, that annually adjusts the
minimum wage based on inflation and
the CPI.
The CPI, which is published by the
U.S. Bureau of Labor Statistics, is a
measure of the average change in
prices over time for a fixed “market
basket” of goods and services, such as
food, shelter, medical care, transporta-
tion fares and other goods and services
people purchase for day-to-day living.
$500,000. That rate drops back to 9.9
percent in 2013. Taxable income equals
gross income minus deductions, so in
reality the increase affects households
earning rather more than a quarter mil-
lion dollars a year — a taxpayer would
typically gross $278,000 before their
taxable income reached $250,000. The
Legislative Revenue Office estimated
that just 28,000 personal income tax-
payers will pay more under the new
law. And the higher rate doesn’t apply
to all income, just the portion of in-
come over $250,000, so for example, a
couple with taxable income of
$260,000 a year would pay an extra
$180 a year.
Nonetheless, the two increases are
expected to raise over $350 million a
year in additional revenue over the next
two years. It was the Legislature’s way
of protecting education, health care and
public safety services during the reces-
sion without imposing across-the-
board tax increases.
An early August poll by Grove In-
sight for the Oregon Center for Public
Policy showed that voters approve of
the increase by a 2-to-1 margin — be-
cause they are targeted at people and
corporations who can afford to pay.
“If they talk about the facts of these
measures and who they really impact,
we’ll win,” Moore said. “So they have
to scare people into thinking the tax
will affect them.”
Moore predicts that opponents of
the tax increases will spread misinfor-
mation: The tax increases will be talked
about in general terms, as if they affect
most taxpayers, and will be blamed,
without evidence, for job losses. “We
know the other side has an extraordi-
nary amount of money,” Moore said.
The “no” campaign will be run by
corporate lobbyist Mark Nelson, who
in 2007 raised $12 million from to-
bacco companies and defeated a ciga-
rette tax increase that would have
funded health care for children. So far,
contributors to the campaign to undo
the increases have included Associated
General Contractors, Associated Ore-
gon Industries, the Oregon Bankers As-
sociation, the Portland Business Al-
liance, and timber and oil companies.
Oregon’s labor movement will
likely be drawn in to defend the tax in-
creases. At its final meeting before the
Oregon AFL-CIO’s Oct. 25 convention
in Bend, the labor federation’s Execu-
tive Board will vote on a recommenda-
tion to support the campaign.
The campaign is getting started right
away. In Portland, Defend Oregon is
calling for volunteers to meet at the
Machinists District Lodge 24 hall,
3645 SE 32nd Avenue, (just South of
Powell Boulevard) Saturday, Oct. 3, at
10 a.m. to distribute literature.
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