S tre e t R oots • March 24-30, 2017
Commentary
Page 11
Oregon has to face facts and overhaul our tax system
BY ROBIN HAHNEL
C O N T R IB U T IN G C O L U M N IS T
orporations and the wealthy
understand where their self-interest
lies in regard to taxes. It’s time for
the rest of us to wise up and start voting in
our self-interest as well. Here are two
examples from last November’s election:
1. Measure 97 would have raised $3
billion a year entirely from large
corporations in such a way that it would
have been difficult if not impossible for
them to raise prices and pass the tax onto
Oregon consumers. Yet 59 percent of
Oregon voters fell victim to a $30 million
corporate advertising blitz and voted against
Measure 97.
2. A vote for Donald Trump was, among
other things, a vote to replace Obamacare
with Trumpcare. Those who stand to lose
more than $1,000 in tax credits per year
from this change supported Trump over
Clinton by a 7 percent margin. And those
who stand to lose more than $5,000 in tax
credits per year from the change supported
Trump over Clinton by a 23 percent margin.
Why are all but the wealthy so confused
when it comes to taxes and their self-
interest? Why have so many of us become
easy marks for corporate-funded think tanks
and Republican Party propaganda?
Corporations and their think tanks and
business associations have long played on
two fears:
■ Corporations are the job makers. If we
tax them they will leave and take our jobs
with them.
■ Resistance is futile because
corporations will pass on any tax by raising
prices the rest of us pay.
Notice that these two widely held fears
are mutually contradictory: If corporations
can pass on the tax there is no reason for
them to leave. If they leave it is because
they could not pass on the tax. But more
importantly both fears are completely
unfounded. Countless studies show that
states that tax corporations more heavily do
not suffer from more unemployment or
higher prices as a result. Oregon, which
taxes corporations less than every other
state, does not benefit from higher
employment or lower prices than other
states.
Those who benefit from shifting the
burden of taxation onto the rest of us also
play shamelessly on two understandable
sentiments:
■ All of us can find some government
programs paid for by our taxes which we,
personally, would not buy.
■ When April 15 rolls around, all of us
can find someone else who pays too little
compared to us.
I can testify personally that both these
sentiments are very real: I do not like paying
my share for 90 percent of the Pentagon
C
Robin Hahnel is a
Professor o f Economics
Emeritus at American
University in
Washington, D.C.,
faculty affiliate at
Portland State
University, and co
director o f economics for
Equity and the
Environment.
Total state and local taxes imposed on
non-elderly residents in the U.S.
Averages for all states, 2015
12%
Source: Institution on Taxation and
Economic Policy/Common Dreams
7.0%
budget. And I am furious that a billionaire
businessman named Donald Trump took
advantage of a loophole so absurd it has
since been closed, to pay no federal taxes
for 18 years while I was paying more than
20 percent of my hard-earned wages to
Uncle Sam. This is why the most effective
Republican campaign slogan has long been
to paint their opponents as “tax and spend
Democrats.”
But the universal sentiments that others
should pay more and the government does
not always spend my tax dollars as I would
wish, is an unavoidable economic fact of life
since 1: Everyone would like to ride free on
others’ purchases of public goods, and 2:
people will always disagree over which
public goods are more valuable. To wish
otherwise is no more realistic or productive
that to wish it would not rain in Portland
during the winter.
Over the past 30 years corporate funded
think tanks and Republican Party
propaganda have successfully played on
these fears and sentiments to hoodwink
many of us into voting contrary to our self-
interest, so programs we desperately need
go increasingly underfunded while
legislators pass tax cuts, exemptions and
loopholes for corporations and the wealthy
in exchange for their campaign
contributions.
Here are some important “tax facts” - not
“alternative tax facts” - people should bear
in mind:
■ The average tax burden in the United
States is much lower than in most other
high-income countries, and also far less than
it was 35 years ago here in the U.S.
■ Corporations and upper income
households benefited most from the decline
in taxation as a share of income since 1980
- which is why middle-class Americans
increasingly feel over taxed.
■ The share of state revenues coming
from business is lower in Oregon than in
every other state.
■ For lack of adequate funding, K-12
public education in Oregon has deteriorated
to deplorable levels: Oregon has the fourth-
lowest graduation rate and the third largest
class sizes in the country largely because we
spend less per
student than
S4%
Lowest 20%
Less than
$19,000
Second 20%
$19,000-
$35,000
Middle 20%
$35,000-
$56,000
Fourth 20%
$56,000-
$93,000
Next 15%
$93,000-
$190,000
Next 4%
$190,000-
$471,000
Top 1%
+$471,000
Income range
34 other states.
■ To be successful in the new global
economy, countries, regions or states will
need a healthy, well-educated workforce.
Because Oregon is currently underfunding
education and health care by more than $3
billion a year Oregon is on a fast track to
becoming Appalachia West.
■ And finally, because of rising healthcare
costs, a declining federal share of medicaid
expansion, and a court ruling that Oregon
cannot renege on a contract with retired
state employees, the legislature is facing.a
$1.6 billion dollar deficit immediately.
The Joint Committee on Ways and Means
of the Oregon state legislature has just
completed hearing testimony from
concerned citizens around the state about
our budget crisis. The dog and pony show is
over, and now the legislature will attempt to
pass a budget. Unfortunately there is little
reason to hope they will do what is needed,
which is: Raise revenues by more than $3
billion annually, and make the tax system
more fair by dramatically increasing the
share of taxes paid by businesses. However,
here are some things they can and should
do:
■ Pass a gross receipts tax of 2 percent
on annual sales in-state of over $100 million.
■ Increase the corporate income tax rate
by 1 percent.
■ Reduce the top corporate income tax
bracket back to $250,000, where it was in
2012.
■ Expand the state’s list of tax havens to
include the Netherlands, Ireland,
Switzerland and Hong Kong.
' ■ Repeal the wealthy business owner
income tax break.
■ Pass Governor Brown’s
proposal to increase taxes on
hospitals, managed care organizations and
medical insurance companies.
■ Cap the total that can be claimed from
itemized deductions, turn itemized
deductions into a credit so they benefit
lower income people more, and phase out
itemized deductions for higher income
taxpayers.
■ Reinstate the top personal income tax
rates under Measure 66.
■ Reform the mortgage interest
deduction to eliminate its abuse by high
income filers while preserving it for middle
and low income filers.
The Oregon Center for Public Policy
estimates that these measures would raise
an additional $5.7 billion in revenues for the
2017-19 biannual budget. This is still not
enough to adequately fund K-12 and higher
public education, or pick up medicare
expenses which Trumpcare is about to
dump on the state. But at least it would
move us in the right direction.
Democratic lawmakers need to
understand that Oregon’s budget crisis
cannot be fixed by tinkering a little here and
there. It can only be fixed by a significant
increase in revenues and finally making
business pay its fair share. Republican
lawmakers need to understand that if they
continue to kowtow to national Party
discipline and refuse to vote for any increase
in taxes, they will be held responsible for
turning Oregon into Appalachia West. And
we residents need to understand that
Oregon will continue to slide down that
slippery slope unless we finally stop our
legislators from kicking the can down the
road, and force them instead to pass a
landmark budget very different from the
kind they have passed for decades.