Will huge new Measure 97 (IP 28) taxes be ‘for the kids’?

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by NW Spotlight

The public employee unions behind Oregon’s Measure 97 (IP 28) say that the $3 billion per year in new taxes will go “to better fund Oregon’s schools, health care and senior services.” Those new taxes will be borne by businesses like Powell’s Books.

The Oregon Business Association reports “this unprecedented new tax would increase costs for working families and consumers and would hurt businesses in our state without any guarantee the money will make it into our classrooms or help our schools. That’s because all of the money from this measure goes to the General Fund with no plan and no accountability for how IP28’s billions in new taxes would be spent.”

So is there any guarantee that Measure 97’s billions of dollars in new taxes will be ‘for the kids’? Or even for health care and senior services and not pet priorities?

No, there isn’t.

Rep. John Davis (R-Wilsonville) recently asked the non-partisan Oregon Legislative Counsel about that. Here are several of the key takeaways from their response:

“You asked whether section 3 of Ballot Measure 97 (2016) (Initiative Petition 28) is binding to limit the ability of the Legislative Assembly to appropriate revenues that would be generated by the passage of Measure 97. The answer is no. Section 3 would not bind a future legislature in its spending decisions. If Measure 97 becomes law, the Legislative Assembly may appropriate revenues generated by the measure in any way it chooses.”

“In this instance, section 3 of Measure 97 purports to limit the ability of the Legislative Assembly to spend certain tax revenues for purposes other than those listed in the section. This would impermissibly attempt to limit by statute the plenary exercise of the legislative power vested in the Legislative Assembly by Article IV, section 1, of the Oregon Constitution. A statute such as section 3 may not limit the constitutional power of the Legislative Assembly to pass subsequent laws. Any such limitations must be in the Oregon Constitution. Therefore, any subsequent law enacted by the Legislative Assembly that spent the tax revenues in a way that is contrary to section 3 would be a valid enactment of the Legislative Assembly.”

UPDATE (8/3/2016)Statesman Journal: Corporate tax measure doesn’t specify spending

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Posted by at 05:19 | Posted in Measure 97, State Taxes | 26 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Even if legislators were to spend the IP28 dollars exactly as set out in the measure, nothing stops them from turning around are redirecting money they would have spend on, say education, to another use. All General Fund money is fungible, and the unions that put this measure on the ballot know it.

  • Granola girl

    My guess is it will go directly to PERS. I heard on the news today that PERS did not make the promised return, therefore the tax payers are on the hook for even more $$.

    • Arele

      Yup, Oregon’s unfunded PERS liability climbs $218 billion:
      http://oregoncatalyst.com/34116-oregons-unfunded-pers-liability-climbs-218-billion.html

    • Connie Kosuda

      reality free, as per usual. must be a treat for you / like granola.

      • Granola girl

        You know Connie, you must be an angry person. If you cant have a civil conversation, why don;t you just move on. Its really a turn off to everybody….

        • Connie Kosuda

          no, not at all, wrong again.

          have some granola!

          • Granola girl

            you are a true wack job

          • Connie Kosuda

            poor baby .

          • Spaying her follies

            You can set your sass @ Lenin’s tomb and solicit for whatever floats your emote Ms ‘Suda.

  • oregongrown

    This mega-billion dollar tax is wrong no matter how the government unions try to spin it. It IS the PERS Tax. There is a perennial budget shortfall because PERS is smashing every single government budget. This is NOT news. The lowlifes in charge of Oregon for almost 30 years, the Democrats, with 30 years of Dem governors, have morphed PERS into the monster it is, with greed. Simple math showed them that fact over 20 years ago. But they still credited PERS members with BILLIONS above what should have ever been credited, and were advised against it multiple times. A lot of evidence to show that. They did it anyway.

    And not only over-crediting but spiking and Double Dipping and so many PERS abuses all put in place by collective bargaining which is just Dem politicians promising whatever they want to government unions to get union money to campaign to stay in office. The people forced to pay never had a say. If we had known we would have said no way, not only because it was morally reprehensible but because the math was not sustainable.

    The PERS debacle is a result of greed. They made their choice to drain the PERS fund, make it insolvent and Oregon taxpayers have been hammered time and again to make up the shortfall. Time to say no to government greed. They made their choices so now let them start the layoffs they should have done 20 years ago to offset the greed. PERS Tier 1 gluttons will be on the take for the next 30 year, the largest segment of all retirees and we cannot afford the current workforce and the PERS pensions on steroids.

    Vote NO on Measure 97. Vote NO on government greed.

    • Connie Kosuda

      you prefer oligarch greed, I see / and my oh my what a bunch of whiners they are.

      btw: READ THE BILL this time / none of what you opine is accurate or based in reality..

  • Connie Kosuda

    can you post a copy of this bill so that we can see for ourselves?

    thanks.

    • thevillageidiot

      for those of you who want to be spoon fed. http://voteyeson97.org/initiative/ or here
      http://oregonvotes.org/irr/2016/028text.pdf

      not sure this is the final state for the ballot.
      If you are an S Corp you will pay $150. how many sole proprietorships out there have become S Corps in order to do business. None of the corporations will pay one penny in tax. It will all be passed on in increased cost. This is the basics of economics. Powells books has already made public they may go out of business, charge more for the used books or shrink to a specialty store dealing in rare books (high margins and can pass on the cost to the buyer). How many times in the past have Oregonians voted no on a sales tax. This is another sales tax disguised as a tax on evil business which create jobs. How many evil businesses can you name? Intel, Nike, Techtronics, Xerox, HP, all the grocery stores, all the clothing stores, all the auto parts stores. there will be special cases decided by the appropriate bureaucrat following the appropriate amount of promised bribe. I call a spade a spade. So if you want to pay a sales tax on top of a very high income tax then by all means move to California where you can have both.

      • Connie Kosuda

        if only any thing you said was true or accurate , it would be helpful /

        as it is neither, move on.

        • Bagwan with ewe

          You’re as ba-a-d as Hanoi Jane, ewe libtard fleecey one.

        • thevillageidiot

          Please point out the inaccuracies.

    • HBguy

      You mean you haven’t even read it?

  • Connie Kosuda

    looks great / long overdue / corporations too often pay ZERO taxes / and far too little in the best of circumstances / we need this tax / vote for it. even better : READ THE THING / DON’T TAKE A RIGHT WING- er’s opinion as to what it says / read it yourself.

  • Connie Kosuda
    • HBguy

      The fact that the Yes on 97 people with held their own economic report for 4 months, and in the meantime commissioned this Cheerios google download by social workers and tech dudes, tells us they are very worried about the voters learning the economic impact of this bill.
      In fact, IMO the biggest weakness is when the voters learn that 80% of the taxes will be passed on to all of is in higher wages, and in particlar this will hurt the poorest Oregonians the worst. How do the Dems sell that to the Bernie Sanders supporters?

      • Connie Kosuda

        rhetoric aplenty / any real analysis supporting your claims?

        I realize you are merely parroting the party line propaganda / but puhleeze got any facts?

        • HBguy

          This link (below) to Oregonian article captures the three valid economic studies. I’m surprised you’re not aware of them. I’ve read most of two of them the LRO and the PSU study. Both say, higher costs to consumers across the board.
          I really wish progressive Dems would consider the impact on the poorest Oregonians.
          http://www.oregonlive.com/politics/index.ssf/2016/08/economic_studies_could_fuel_co.html

          • Connie Kosuda

            says quite a lot: not exactly what this group is selling:

            State economist’s analysis

            Takeaway: The tax would apply to only a small set of companies — just under 1,000 C-corporations — but more than 200 are based in Oregon and they would face large tax increases.

            Author: State Economist Mark McMullen, who has a master’s degree in public economics. McMullen works in the Office of Economic Analysis, which advises the Legislature and other state officials and provides the economic forecasts on which the Legislature bases its budgets.

            Details: The report found only 3 percent of C-corporations that do business in Oregon would likely pay the tax. For those companies, however, the ballot measure would cause their average tax bills to more than double with the exception of the agriculture and natural resources industries.

            McMullen also looked at an even smaller subset — the 230 Oregon-based businesses subject to the tax — and found they could face tax increases of more than 1,000 percent, from an average of $200,000 to $2.2 million. McMullen based his conclusions on an examination of corporate tax returns at the Oregon Department of Revenue.

            McMullen said the report contained only preliminary estimates that he assembled in the spring when other more rigorous studies were anticipated but had yet to be published. State officials were eager for information on the tax’s economic impact.

            Legislative economists’ analysis

            Takeaway: The tax measure would stabilize the state budget and generate an additional $3 billion for the Legislature to spend annually. It would also cause a moderate net slowdown in job growth, with many businesses passing the cost along to consumers.

            Authors: Oregon Legislative Revenue Officer Paul Warner and Senior Economist Chris Allanach. Warner has a doctorate in economics, and Allanach has a master’s degree in applied economics. The nonpartisan Legislative Revenue Office provides analysis for the Legislature.

            Details: The tax could result in the creation of 20,500 fewer jobs by 2022 and also dampen income and population growth over the next five years. However, the changes would be moderate: within 1 percent of existing projections.

            Specifically, the economists estimated 38,200 fewer private sector jobs and 17,700 more government jobs would be created over the next five years.

            The tax would largely act as a consumption tax and many businesses would pass the cost on to consumers. It would increase the stability of state revenues during economic ups and downs, and reduce Oregon’s dependence on personal income taxes.

            Portland State University’s analysis

            Takeaway: The tax measure would spur the creation of 13,000 to 21,600 new jobs, with all the gains in the public sector. Job creation would slow in the private sector, and the measure could carry some downsides commonly associated with gross receipts taxes.

            Authors: Tom Potiowsky, former state economist and director of Portland State University’s Northwest Economic Research Center, and the center’s Senior Economist Michael Paruszkiewicz. Potiowsky holds a doctorate in economics and Paruszkiewicz holds a master’s degree in economics.

            Details: The economists found the tax would result in 8,400 to 17,000 fewer new jobs created in the private sector, but add an additional 30,000 government jobs over the next five years. The Northwest Economic Research Center explained the difference between its employment projections and those of legislative economists stems from different baselines in their economic models: The state assumed more robust growth in the private and public sectors without the tax.

            The economists also raised some of the same concerns about the gross receipts tax as legislative economists. For example, low- and middle-income households spend more of their money on consumer goods, so they would be disproportionately impacted if companies pass the cost along to consumers.

            Our Oregon and Oregon Consumer League’s analysis

            Takeaway: Prices for a selection of mostly national brand items sold by four big box stores and a grocery chain are the same regardless of the level of corporate taxes in different states.

            Authors: Shamus Lynsky, interim executive director of the Oregon Consumer League, and Daniel Morris, research director for Our Oregon. Lynsky has a bachelor’s degree in sociology, and Morris has a master’s degree in physics and a doctorate in public health.

            Details: The Consumer League and Our Oregon based their findings on an examination of prices for 23 items advertised online at national big box stores and in ads for Kroger grocery stores.

            “Our study shows that, despite what corporations may say, an increase in state corporate taxes will not translate into higher prices for common consumer goods,” the authors wrote, adding that the ballot measure “affects national companies, and national companies use national pricing.”

            The report backed up Our Oregon’s claim over the last year that major national retailors charge the same price for big brands like Snickers across the country, regardless of local corporate taxes.

            Although Lynsky and Morris wrote that their goal was to answer the question of “how this measure will affect Oregon consumers,” the report did not delve into other areas where companies could pass the cost of the tax on to consumers. For example, utilities have already said they would pass the cost along to ratepayers, which they can do with approval from the state’s Public Utility Commission. Insurance and some health care companies would also pay the tax and have to decide whether to absorb or pass along the cost.

          • HBguy

            Here’s how I see it. The Republicans are against any and all taxes. But they refuse to admit that there is going to be a $1-2 billion hole in the next biennium and have inadequate solutions on cost control. So we will need more revenue (I know I’ve lost the OregonCatalyst boosters here. But read on if you’d like) The Democrats propose this politically brilliant (Tax the big out of State corporations!) measure that is horrible public policy, and which imposes even more burdens on the working poor just so they can secure public employee jobs and benefits. This measure throws those on the low end of the wage scale and fixed income folks under the bus. It’s anti progressive.

            So, what do you do when the Dems and Reps fail to compromise through legislation? Do we Vote for this measure and hope the Democrats will propose necessary fixes in 2017? Or Oppose it and hope that the Republicans propose reasonable revenue enhancements in exchange for some cost reductions, and that the Dems actually agree to some cost reductions?

            Consider this. The Democrats only need 50% of the House of Representatives to pass reasonable fixes to IP28 so they could do it on their own. But revenue enhancements will require – absent the Dem’s picking up one more House seat – at least some Republicans willing to negotiate on tax increases.

            What’s more likley to happen?

            That could lead one to conclude that it’s best to vote for the measure. Because based on what I’ve heard from candidates and electeds this summer fixing IP28 is more likely to happen than getting any Republican to support a revenue enhancement.

            If the Republicans wanted to defeat IP28, all they’d need to do would be to say that because of PERS the GOP is prepared to increase taxes in 2017 on the following conditions. Modest PERS reform. A more modest tax increase. And the funds used for education and tax relief for the poor.

        • Interestingly, on other articles, YOU are the one who fails to provide proof.

  • Marcel

    I don´t understand this hole thing and i´m from hannover so what happened?

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