Measure 66 and 67 explained

January 1, 2010

Legislators who voted to enact Measures 66 and 67 know the measures were good for business and prevented deeper, more harmful cuts. As state Representative Chris Harker (D-Beaverton) noted in an opinion column in The Oregonian, Measures 66 and 67 are “necessary steps to promoting the health and well-being of our state as a whole.” Read Finding the courage to build community.

The long-term health of the state requires that we renew our commitment to our public structures. As the The Register-Guard observed, Oregon has witnessed "the slow strangulation of public services, including education, resulting from shifts in Oregon tax policy. Measures 66 and 67 won’t reverse these shifts, but the proposals will arrest their acceleration. In this context, both measures deserve approval." Read Oregon’s tax decision, part III: Measures 66, 67 counter long-term shifts.

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Why Measures 66 and 67 Make Economic Sense

“[I]n a recession, it is preferable for states to enact targeted tax increases than to cut services.” That’s what 36 Oregon economists said in a letter to Oregonians backing Measures 66 and 67. Read the news release Oregon Economists Endorse Legislature’s Tax Measures: Balancing cuts and tax increases was “a prudent course of action.”

The Oregon economists’ letter (PDF) echoes a report by the non-partisan Oregon Legislative Revenue Office. In that report, the legislature’s economists concluded that state spending reductions “tend to decrease economic activity more than tax increases.” See LRO, Measures 66 and 67, report #6-09, revised (PDF), November 2009, and LRO, Measures 66 and 67: Frequently Asked Questions, report #7-09 (PDF), November 2009.

While opponents allege that the tax measures would result in job losses, those claims are “without merit,” according to experts at the Washington, D.C.-based Urban-Brookings Tax Policy Center. The Tax Policy Center’s analysis shows that opponents of the measures are relying on phony job numbers shoddily cooked up by hired-gun economists, namely Randall Pozdena and Bill Conerly.

Oregon economist Joe Cortright also examined the job-loss claims by Randall Pozdena, Eric Fruits and Bill Conerly. Cortright concluded that "neither the economic literature nor the data presented by [Pozdena, Fruits and Conerly] support the claim that Measures 66 and 67 will be bad for the Oregon economy. Given our current economic straights, cutting public services would be far worse for the economy than these modest tax changes. Oregonians who are concerned about jobs should vote yes on Measures 66 and 67."

In addition, Oregon State University economist William Jaeger has shown that Oregon's taxes as a share of personal income are significantly lower than the national average and would remain below the national average even after passage of Measures 66 and 67. Read Perspectives on Oregon's Taxes: An economic look at Measures 66 and 67, December 2009, and the OSU news release, Economic Study Shows Oregon's Taxes Below National Average.

As an editorial in The Register-Guard concluded, "Oregonians are right to be wary of placing any added strain on employers. Measures 66 and 67, however, would have only slight effects on the business climate — lesser effects than would occur if the measures are defeated." Read Oregon’s taxing decision, Part I: How would Measures 66 and 67 affect business climate?

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How Measures 66 and 67 Improve Oregon's Tax Structure

Two-thirds of Oregon C-corporations — including many profitable corporations — pay only $10 a year in income taxes. Measure 67 would raise Oregon’s minimum tax, stuck at $10 for over 75 years.

Too many Oregonians think that only companies without profits get away with paying just $10. As we explained in a short opinion column, Making Money and Paying the Corporate Minimum Tax, that's not so.

The increase in corporate tax revenues from Measure 67 is important, but it does not reverse the long-term shrinking of corporate income taxes as a share of Oregon’s income tax revenue. OCPP explains the issue in a news release, Latest Revenue Forecast Shows That Even With Tax Increase, Corporations’ Share of Income Taxes Still Lags.

Measures 66 and 67 also take a step toward fixing Oregon’s upside-down tax system, which asks more of the poor than of the wealthy. Right now, poor Oregonians pay a larger share of their income in state and local taxes, combined, than any other income group. The wealthy, by contrast, pay the smallest share. By asking the wealthiest Oregonians and large corporations to contribute more, Measures 66 and 67 would begin moving Oregon’s tax structure in a better direction. Read the news release Oregon Moves Closer to a Tax System Based on Ability to Pay: But even with Measures 66 and 67, the wealthy will pay proportionally less than the poor and the issue brief A Step Toward Balance: Measures 66 and 67 move Oregon closer to a tax system based on ability to pay.

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The Opposition’s Tactics to Scare and Confuse Voters

Because Measures 66 and 67 are good for Oregon and its economy and affect only three out of every 100 taxpayers, the facts are on the side of the “yes” campaign. The opposition hopes to win by scaring and confusing voters into thinking their taxes and the costs of the goods and services they provide will go up and that we’ll have significant job losses.

Small business owners in particular have been a target of the misinformation campaign. For example, in Ontario, Oregon, the owner of Warrington Irrigation erroneously thought that his company's taxes would rise sharply as a result Measures 66 and 67. The sources of his confusion were campaign materials by opponents of the measures and a misguided accountant. When he learned that his business was going to have to pay only $150 more in new taxes and that his personal income taxes were not going up, he said, “I can handle that.” Read his story in Accountants and Journalists: Get the Facts Straight on the Revenue Measures and Stop Scaring People!

Big business in Oregon has shown that they will resort to outright deception in their efforts to scare small businesses. As explained in The restaurateur who isn't feeling the tax pinch, Associated Oregon Industries, one of big businesses’ lobbying arms, used a picture of a restaurateur in its quarterly magazine to imply that the measure would hurt small businesses in general and restaurants in particular. But AOI never spoke with the restaurateur, who will only pay $150 in taxes, is not opposed to the measures and likes paying taxes.

Farmers have also been the target of the scare tactics. Acting as a conduit of the lobbyists for big business, the owner of Leuthold Dairy Farm sent a letter to 290,000 Oregon households claiming that her business would be harmed by the measures. But under questioning by a reporter, she conceded that all that her business will owe is $150 and that she's a lucky farmer with taxable income of $250,000 or more.

It doesn’t take a degree in accounting to understand how Measures 66 and 67 work, but CPAs know that the new corporate taxes are affordable. “It's time to end the scare tactics and get down to the facts. In my career as an accountant and instructor, I've never encountered a single corporation that couldn't afford the Legislature's modest tax increase, especially as it is applied,” wrote CPA Brian Setzler in The tax measures: High time to even the playing field, an opinion column in The Oregonian.

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Polling Data

We wanted to know where Oregonians stood on the issues before the campaigns started spending money and influencing voters.

So OCPP conducted a pre-election poll during the signature-gathering phase, and it showed that Oregonians would favor Measures 66 and 67 by more than a two-to-one margin. Read our news release and the actual poll questions and results: New Poll Shows Most Oregonians Back Legislature’s Tax Measures .

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The Impact of the Measures After Enactment

The following publications examine how Measures 66 and 67 have impacted Oregon's economy and revenue collections following their implementation.

Chuck Sheketoff, Measures 66, 67 averted deeper cuts in state, Statesman Journal, October 8, 2011