The Legislature suffers from a seemingly incurable case of twistedness on taxes.
A tax is almost never called a tax. It is whirled and spun into something else — anything but calling a tax a tax. For instance, the Legislature declared in 2017 the health care tax to help fund Medicaid was not a tax. It was an “assessment.”
This year, the Legislature’s carbon-pricing bill is also not going to be a tax.
Why? The bill says so!
The bill says explicitly it is not the Legislature’s intent that it is a “bill for raising revenue.” Of course, the bill does raise revenue. Twistedness is back.
But there are very important reasons the writers of the bill have done that. It is a complicated and controversial bill that will raise prices of gasoline and other products in Oregon. If it’s called a tax, Oregonians might be more likely to tell their legislators to vote “no.”
But there are other technical implications if it is a tax. If it’s a tax, the bill requires a three-fifths vote to pass the Legislature rather than a simple majority. Even though the Legislature is dominated by Democrats, getting a three-fifths vote could be a challenge.
And another technical reason that language in the bill could be important is a legislative counsel opinion about a 2017 version of the bill. The opinion pointed out that some people may still argue that the bill is a tax.
The opinion said that in Bobo v. Kulongonski “the Oregon Supreme Court adopted a two-pronged test for determining whether a bill is a bill for raising revenue:
The first is whether the bill collects or brings money into the treasury. If it does not, that is the end of the inquiry. If a bill does bring money into the treasury, the remaining question is whether the bill possesses the essential features of a bill levying a tax.”
It’s nearly impossible to argue that the bill does not bring money into state government, because, well, it does. But things get more complicated when you consider if the bill “possesses the essential features of a bill levying a tax.”
The bill just doesn’t work like most taxes. It doesn’t directly levy a tax. It’s a form of cap and trade. The idea behind the bill is to lower carbon emissions. The state will set the quantity of carbon emissions reductions for businesses and let the market determine the price of allowances for producing carbon. Money raised, perhaps hundreds of millions, will be spent by the Legislature — basically to make Oregon greener. But as we said, the bill will still raise prices on goods, especially by raising the price of gasoline.
Somebody who doesn’t like the bill could very well argue it should be considered a tax. They could argue, as the counsel wrote, that “the primary legislative purpose for requiring the Oregon Department of Environmental Quality to auction allowances is to exact revenues from auction participants for the use of government.” The auction bidders do get something in return, as does almost anybody who pays taxes. But the benefits of the revenues are then repurposed by the Legislature for Oregonians and not just the auction bidders.
Oregonians are under no obligation to believe it when legislators try to argue this carbon-pricing bill is not a tax. It may not work like most taxes, but it sure works like a tax.