PORTLAND — Sen. Bernie Sanders, I-Vt., did well in the Pacific Northwest during the presidential primary season with his lectern-pounding message about fairness, need and corporate greed.
A ballot measure here this fall that would sharply raise corporate taxes is now testing just how deeply Sanders’ message about economic inequality has sunk in.
“Our corporations have to be held accountable!” shouted Kayse Jama, executive director of a group called Unite Oregon, as he rallied several hundred supporters of the proposal, known as Measure 97, on a recent evening in a local shopping mall. He even sounded a bit like Sanders, his voice hoarse with passion.
If approved by the voters here in November, Measure 97 would create the biggest tide of new tax revenue in any state in the nation this year as a percentage of the budget, economists said — and one of the biggest anywhere in recent history. Oregon’s general fund would grow by almost a third, or about $3 billion a year, through a 2.5 percent tax on corporate gross receipts. The initiative language says the money would augment state spending on education, health care and senior services, but does not bind the Legislature to any specific plan.
Labor unions, led by teachers, are leading the fight for passage, arguing decades of erosion in education funding are the cause of the state’s dismal high school graduation rate, among the lowest in the nation. Opponents have raised about $8 million — four times as much as supporters — through contributions from large companies like Amazon, General Motors and grocery chain Kroger/Fred Meyer. They say companies will simply raise prices, a cost that will be passed along to consumers, or might cut jobs or move operations elsewhere.
The fight comes against a backdrop of economic boom. Job growth this year is ahead of every state’s but Idaho’s, according to federal figures. Personal income is rising at the seventh-fastest rate in the country. But state budget officials warn of rising costs on the horizon as health care and pension expenses rise. Whether Measure 97 would solve social problems through increased spending, or create new ones by hampering job growth, has become a dividing line in the governor’s race.
“It’s time for corporations to pay their fair share,” said Gov. Kate Brown, a Democrat who took office last year after the resignation of her predecessor, John Kitzhaber. The state, she said in an interview, has had 48 months of economic growth since the recession, the longest sustained expansion in decades. Cutting programs now to avoid raising taxes, she said, would devastate the most vulnerable residents.
“It is absurd and ludicrous to me that we would cut early childhood education programs that we just made investments in, that we would rip away those programs from the families that need it the most, that we would increase class sizes under these circumstances, that we would reduce access to college and make college less affordable,” said Brown, who is running for her first elected term.
Her opponent, Bud Pierce, a Republican, is against Measure 97. He has hammered Brown and the Democrats on a question swirling through politics across the nation: Can government be trusted to do the right thing?
“Are you going to get what you really want?” said Pierce. “Are you really going to get a prosperous society with people employed and a bright future, or are you going to end up with more and more money centralized in government hands? And frankly, government doesn’t have a good track record of using resources efficiently and getting us the result we want.”
He agreed with Brown, though, that this year’s vote will be a decisive moment for the state. “It’s time to move our state from the hard left toward the center,” he said.
‘We don’t know what the impact is going to be’
If the ballot measure passes, not every company will be affected. Out-of-state corporations, and those with $25 million or more in revenue, would pay the new tax. Smaller businesses would not. That disparity has cut like a knife through the business community.
Powell’s Books, for example, a Portland institution since the 1970s in its sprawling multifloored “city of books,” has mostly been loath to speak out on political controversies over the years, said its owner and president, Emily Powell. Measure 97, she said, has forced her hand.
“It’s poorly written,” Powell said, sitting in her office on a recent morning as customers swarmed through the bookstore. Inexact language about where the money would go, she said, is one reason for her opposition.
“That’s in some ways the most worrisome part: We don’t know what the impact is going to be. It may or may not accomplish the ends that it hopes to, and it will certainly negatively impact us, as well as a lot of other businesses in the process.”
Across town, the Hawthorne Auto Clinic is equally storied in its local history, with roots going back to the horse-and-buggy days of transportation, and still in the same building. A co-owner, Jim Houser, gestured to the shadowy curved outlines on a brick wall as he showed a visitor through the shop — the old hearth was there, he said, where iron was heated for horseshoes.
With only 13 workers, Hawthorne is too small to be affected by the tax, though Houser said he would be happy to pay more in taxes if the law was changed. He is strongly for Measure 97, he said, partly because it would put money into the community colleges and tech training programs he depends on to get workers.
“K-12, postsecondary and higher education have been slashed, slashed, slashed, and so what it’s done is it’s hurt our ability to recruit and retain trained technicians,” Houser said. “We don’t have the capability to set up our own advanced training program.”
Numbers are weapons in the Measure 97 fight. One example: 3.4 percent, Oregon’s “total effective business tax rate,” tied with Connecticut for lowest in the nation, according to the Council on State Taxation, a Washington-based trade group that represents corporations. Oregon does not have a state sales tax.
Another number is $600, from the nonpartisan Legislative Revenue Office, calculating the new tax burden per Oregon resident. Taxpayers — whether corporate or household — would not be likely to pay anywhere near that much, the Revenue Office’s analysts said, with perhaps 40 percent of the total new revenue flowing into Oregon from elsewhere, primarily the federal government, through tax deductions.
An Oregon Public Broadcasting/Fox 12 poll, conducted before Measure 97 was formally on the ballot, showed a majority of Oregonians, 57 percent, thought large businesses paid too little in taxes. But a separate poll by the same groups said only 51 percent of voters were certain of or leaning toward support for Oregon’s specific tax plan, with 32 percent certain of or leaning toward opposition, and 18 percent undecided.
Ryan Horn, a hotel manager in Portland, said rent was the main number for him. The cost of housing, he said, is climbing beyond his reach.
“They give them these tax breaks,” Horn said, referring to companies that are being drawn to places like Portland. “So then they bring in their people who make more money, and there’s our housing shortage,” said Horn, 32. Will companies paying more taxes pass that on to consumers? “Absolutely, I just expect it,” he said.
But he said he plans to vote for Measure 97 just the same.
“I will vote for any tax hike against major corporations every day of the week,” he said.