♦
♦
Street Roots • Nov. 17-23, 2017
Commentary
Page 13
Progressive taxes needed to correct our housing crisis
BY M A R Y C. KING
Mary C. K ing is
a Professor o f
Economics
Emerita,
Portland State
University.
C O N T R IB U T IN G C O L U M N IS T
eather forecasters are predicting
another cold, wet winter and local
housing needs are growing, but the
emerging federal budget includes huge
reductions in funds critical to local housing
programs. Despite the recent extraordinary
efforts of local government, we won’t make
a real dent in our housing problems without
more money. That means we need local
taxes on those who have benefited most
from our current economic expansion: big
business and the wealthy.
W
Growing Housing needs
The 2017 count of people without
permanent housing in Multnomah County
rose dramatically from the last count in
2015. Portland-area rents rose 20 times
faster than the typical household’s income
over the same period, according to the
county, making it harder and harder for
people to keep their housing, and to stay in
their neighborhoods.
The outlook is dire, despite the fact that
our local agencies are helping more people
than ever and following the “best practices”
known to housing advocates. Without
significantly more funding, they can’t scale
up to effectively fight the housing crisis we
face in every category: emergency shelter;
supportive transitional housing; and
subsidized affordable housing.
Though the number of people sleeping
rough was cut last year, 1,667 people were
found sleeping outside by the Point in Time
count on Feb. 22. Last year’s housing bond
will raise $258 million, which is expected to
allow the city to build and preserve 1,300
housing units affordable to families with
one-third to two-third the median household
income.
But 1,300 units looks paltry compared to
the estimated need in the Portland area for
more than 25,000 units of affordable
housing, as reported by The Oregonian.
Housing supply hasn’t kept up, mostly -
according to the Oregon state economist’s
office - because the banks tightened up on
lending to builders and homebuyers after
the financial crisis of 2008. It’s not people
moving in or the urban growth boundary,
but years without much financing for
construction except at the high end.
Average people can’t keep up either.
Nearly half of Portland area renters are
“cost-burdened,” paying more than 30
percent of their income for rent, and a
quarter are “severely cost-burdened,”
spending more than half their income on
housing. One in 4 local homeowners is also
cost-burdened.
In truth, the private sector has never
decently housed everyone. Only big, public
programs have created an adequate supply
of good, affordable housing, by both building
public housing and subsidizing people
renting or buying private housing. The
federal government filled that role, before
former president Ronald Reagan slashed
funding for public housing and other
housing programs.
We’ve lived with the worsening fallout for
35 years, and have no reason to expect
Street Sm art Economics is a periodic series
written by professors emeriti in economics for
Street Roots.
anything constructive from D C anytime
soon. Only substantial local investments in
housing and support programs will house
our neighbors currently living in miserable
or unstable circumstances.
The best way to finance housing
investments is to raise taxes on the
wealthiest households and the biggest
corporations, which have been enormously
enriched over the last several decades while
taxes on the 1 percent fell. Concentrating
new taxes at the top taps those with the
most ability to pay and combats economic
inequality, now at historic heights in Oregon
and the nation.
How to raise local taxes on the
biggest corporations, landlords
and the wealthy
We should sharply increase local business
taxes on the biggest firms and landlords
operating in the Portland area by raising
their tax rate to double or triple the rate
Airbnb collects local hotel taxes when
paid by other businesses. Both the city of
people pay online for their Airbnb
Portland and Multnomah County levy a
accommodations.
relatively low tax on the local profits of all
To tax the very wealthy we could follow
but the smallest businesses operating here.
the lead from Seattle,
The biggest, most
which just passed a
profitable
city income tax on
corporations and
Seattle households
The best way to finance hens»
landlords pay the
with incomes of
same low tax rate as
lag iaw stm eats Is t© raise taxes $250,000 or more.
medium-sized
on the wealthiest hensehelds
There is no reason
businesses, but could
and the biggest corporations^
that Portland should
easily afford much
not create a
which h a w been esiornionsly
more.
permanent city
Rapidly rising rents enriched over the last several
income tax for the
decades while taxes on the 1
have meant windfall
top 1 or 2 percent,
profits for big
percent fell.
coordinating with the
landlords. Forbes
state to collect as a
Magazine says real
line on the state
estate leasing is the
income tax form.
second most profitable
industry in the country, raking in an annual
return of 18 percent. Big institutional
investors own more than half the nation’s
apartment buildings and are buying “starter
homes” to rent them out.
Last November, Berkeley, Calif., residents
voted 3 to 1 to nearly triple the gross
receipts tax paid by landlords with five or
more units, dedicating the funds to
affordable housing. San Francisco, Oakland
and East Palo Alto rely on similar taxes,
charged as a percentage of total revenues
rather than profits. The aim is to capture for
city residents part of the value of the
attractive urban culture they are creating.
We could require Airbnb guests in
Portland and Multnomah County to pay
another 1 or 2 percent of rental costs to
support housing programs. That fee could
easily be added to the process by which
Top 1% makes more than bottom 50%
Total Income by Oregon income group in 2015
$17.5 billion
$15.8 billion
Top 1 %
lottom
This chart only includes full-year resident returns.
Source: OCPP analysis of Oregon Dggartmentof Revenue data.
— —
O regon C enter for P ublic P olicy | OCPP.ORG
We shouldn’t be afraid to raise
taxes on the wealthy and big
corporations
Pro-business groups report that Oregon’s
combined state and local business tax
revenues consistently rank at or near the
bottom of all 50 states. Big firms now
contribute very little to our schools, housing
programs and transportation.
Corporations pay a lower and lower share
of state property taxes, due to the structure
of the so-called “reforms” of the 1990s,
which also created tremendous inequity
among households. Businesses tax
payments are also low here because we
don’t charge sales tax. As opposed to a sales
tax, Oregon families and small businesses
would be much better off with a sizeable
increase in city and county profits taxes on
the very biggest companies.
Oregonians with incomes in the top 1
percent took in nearly a million dollars each
in 2015, three times what the top 1 percent
earned in 1980 after adjusting for inflation,
according to the Oregon Center for Public
Policy. The income of the top 1 percent of
Oregonians is now 10 percent higher than
the income of an entire half of Oregon
households (see graphic).
Skyrocketing incomes at the top come
from ownership of capital - real estate,
financial assets such as stocks and bonds,
and privately held companies - as well as
from the outrageous salaries of CEOs and
financiers. Income from ownership of
capital, as opposed to income from work,
has risen dramatically, shifting 10 percent of
GD P from labor to capital over the past 35
years.
It’s not true that more money in the
hands of the wealthy and highly profitable
corporations leads to “job creation.” Jobs
are created when business responds to a
bigger group of people with more ability to
buy shoes, groceries and child care. More
money in the hands of the rich leads to
higher prices for financial assets and
luxuries.
It’s going to take real commitment for a
decade at least to pay for the housing we
need; it’s time to get serious.