Seth Woolley's Blog

Occasional Musings

response to Oregonian editorial against measures 66 and 67(0)

Rick Dancer sent me a link to the Oregonian editorial:

http://www.oregonlive.com/opinion/index.ssf/2010/01/wrong_time_wrong_\
tax_hikes_vot.html

Here follows my response:

Yes, I have seen the Oregonian editorial.  They're a corporation and thus have no innate credibility except as a mouthpiece for their corporate advertisers and owners.  Why would I say that?  Allow me to explain.

First, the tax measures are actually so well-drafted, I doubt I would change one thing about them.  They support local business by penalizing large out-of-state corporations with language that can pass 14th amendment challenge by going after a tiny portion of gross receipts and raising the minimum tax so that even foreign corporations that channel their local profit to tax shelters still have to pay some of their way.  This is a huge win for Oregon.

Second, since some of the very wealthy make their income through not being a C corp, they target payroll taxes, too, and in such a way that zero middle and lower class people are impacted, protecting consumer spending that drives 60 percent of the economy.  On top of that they are partially permanent, so that we can better save up our rainy day fund in the future.  The permanent part increases in progressivity by raising the minimum application of the tax graduationally so the bulk of the reform still applies to the grossly rich!  Ingenious idea!  Everybody who is complaining about the permanence either hasn't looked at the bill or is making so much profit or gross receipts they'd still apply -- we're talking tens of millions here.  The opposition talks about a hundred thousand dollars to profitless corporations, but the only companies that could apply to are those bringing in over a hundred million dollars.  A corporation making over a hundred million dollars might have to pay a hundred thousand dollars, or 0.1% of their gross receipts.  Let me explain how profitless companies work (as I've worked at multiple startups and have stock in them).  Companies that are losing money who haven't fired their employees to become profitable aren't going to fire more because of 0.1% gross receipts tax, for they have chosen to hire people with loans or reserves and they think the return on those employees more than makes up for the loans plus their risk.

Third, it provides tax relief for recipients of unemployment.  I get all the newsletters of every elected politician in Salem to my email.  Even the Republicans were supporting this part!  And they are right.  The unemployed are almost assuredly going to be spending that money in the economy thus making it a direct injection into the recovery and keeping people out of further trouble and keeping them in their homes.  HUGE WIN.

Fourth, it's important that we spend money on some projects that we'll get federal matching dollars for.  If we don't do that, we lose it, and the injection into our economy would be cut in half.  It would be insane not to use that funding source because Oregon is not able to perform Keynesian economic recovery itself due to needing a balanced budget -- only the feds can do it constitutionally.  Another big win for Oregon.

Fifth, the Oregonian says that a valid alternative is kicker reform.

This is a case of direct deception.  Bear with me for a little background.  The kicker only takes effect during economic booms, not busts.  So reforming the kicker only helps us in the next recession not this one.  So we don't have to do it now.  Furthermore, The Oregonian suggests we reform the kicker INSTEAD of raising taxes -- putting an alternative up that the business community will go after later anyways.  Vote down this so you can vote down that in the future!  It's an excellent divide and conquer strategy for business.  I do fully expect the kicker (of what remains) to be reformed to apply to the rainy day fund in the future when we start pulling out of the recession -- when it will actually matter.  That is if the Republicans are still ineffective in the legislature and refuse to be a part of the solution as I watched in awe during the session.

But most importantly, the Oregonian is talking out of two sides of its mouth.  Rick Attig, associate editor and editorial board member drafted in article back in May where he wrote:

"The Oregonian's Jeff Mapes reports that one of the primary supporters of kicker reform, Sen. Ginny Burdick, D-Portland and chairwoman of the Senate Revenue Committee, says kicker reform may have to wait at least until next February. Burdick and other legislators are worried about putting any tax-related measure, even kicker reform, on the ballot this year. That's because anti-tax activists are likely to force to the ballot at least one of the tax increases the Legislature is likely to approve this session. If kicker reform wound up sharing a ballot with, say, an income tax surcharge, it's likely voters would shoot them both down.  /  That political calculation makes sense ..."

So we know the editorial board knows quite well the plan for kicker reform -- it's going to come later.  In the same article Attig even explains how the kicker works in booms and busts.  So the only reason to say no on 66/67 while saying "they could have done the kicker instead" is by PURE DECEPTION.  Yes, they would like to see an "ideal" (in their mind) world with just kicker reform and no tax increase, but THAT DOES NOT SOLVE OUR RECESSION PROBLEM NOW, so the legislature MUST act with this type of tax increase NOW or we risk massive cuts in the public sector, a primary driver of economic recovery, as empirically-minded economists already know.

Sixth, As far as using more of the rainy day fund as they suggest too?  That's one of the few smart things Kulongowski did -- sticking to his guns on not over-raiding the rainy day fund.  That led to more reasonable budget work on the part of the legislature who managed to close a whole swath of old exemption loopholes and thus created less of a need for more tax increases in the future.

Seventh, we don't have to worry about companies moving their offices to Washington or California, because the corporate tax structure for both is worse than it is for Oregon.  I even talked to a tax lawyer for a large semiconductor fab in Vancouver who told me that they regretted locating in Vancouver due to the worse business climate in Washington compared to Oregon, even with these measures.

Lastly, in the opposition statements I've read the complaint that the size of government has increased in Oregon in terms of raw numbers.  The Oregonian has steered clear of this argument, which is good, but I'll explain the problem with it.  None of the figures given accounted for population increases, inflation/deflation rates, Measure 57 implementation, nor the fact that most of the increases were due to temporary federal stimulus dollars only.  The fact is that Oregon government is actually getting more efficient and providing more services per our own income dollar.  To further this, Oregon has put up one of my campaign ideas: a transparency website that helps people understand government expenses and potential waste.  I've already begun datamining the website looking for more ways to improve efficiency.  I do not have this same level of access and accountability to almost all corporations.

This bill has tons of upsides and virtually no downsides.  If corporate personhood were overturned (it was judicial activism in the Santa Clara decision that interpreted the 14th amendment as applying to corporations, as there's no existing law granting corporations personhood) I would have amended the gross receipts language and made it apply to foreign corporations only, but the US Supreme Court has made the language in there now the best of the existing world.

In full disclosure, I've donated a thousand dollars to a mailing to Pacific Green Party members containing material in support of the measures and my wife is a teacher, who would be affected by seven days of school closure and a corresponding pay cut if the measures fail.  She's also already in a pay increase freeze.  I do not make enough money to apply to any of the taxes.  I'm also volunteer State Secretary of the Pacific Green Party of Oregon and volunteer Treasurer of the Portland Metro Chapter of the Pacific Green Party and on the elected volunteer State Coordinating Committee of the Pacific Green Party of Oregon.  I was their 2008 Secretary of State candidate and am currently a legislative spokesperson for the Party (I testify in Salem on behalf of the members of the party).  I work in Portland as a Senior Software Engineer for a Silicon Valley based startup company that is one of those not-yet-profitable non-Oregon corporations.  I estimate my employer of around 100 people might be affected indirectly to the tune of about $70 as a result of these measures passing.

Seth Woolley's Blog

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