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Will Lawmakers Prioritize Oregon’s Middle Class?

Commentary
May 24, 2011By Chuck Sheketoff

What someone spends money on says a lot about what’s important to them.

With the end of the 2011 session in sight, the Oregon legislature has shown little inclination to prioritize the needs of middle-class and vulnerable Oregonians. Indeed, some lawmakers believe that it’s more important to spend money on tax subsidies for corporations and the rich.

To be sure, no one expected an easy legislative session, with the Great Recession and weak economic recovery wreaking havoc on state revenues. With more than 90 percent of General Fund dollars going to schools, health and human services and public safety, it was clear that funding for those public structures was at risk. That spelled trouble for vulnerable and middle-class Oregonians.

Still, if protecting them were the priority, then the legislature would not take a cuts-only approach to balancing the budget. They would take a balanced approach that also raises revenue from those with the greatest ability to pay. That would be consistent with the desires of the majority of Oregonians, as expressed in the January 2010 vote endorsing Measures 66 and 67.

Yet, so far, no bill that would raise revenue has even made it to a floor vote.

What did get a vote early in the session and became law was a $93 million tax break for corporations. On top of this, some lawmakers are proposing to expand existing tax subsidies and create new ones that primarily benefit profitable corporations and the rich.

It boggles the mind that the legislature would prioritize giving tax cuts to profitable corporations.

Not only are corporate profits booming, but the share of income taxes paid by corporations has plummeted over the past four decades. If corporations paid the same share of income taxes that they used to pay in 1973-75, Oregon would have an additional $1.9 billion in revenue for the next budget period. Sadly, today, the Lottery provides more revenue than our tax on profitable corporations.

It’s also baffling that the legislature seems to want to bend over backward to give financial assistance to Oregon’s richest households, a group already slated to get a $134 million tax cut next budget cycle under Measure 66.

When the previous legislature drafted what became Measure 66, which raised the marginal tax rate for joint taxpayers making over $250,000 a year, lawmakers assumed that the economy would bounce back more quickly and strongly than it has, making the tax cut for the most well-off households affordable for the state. But those assumptions have not played out.

It would be more than appropriate for the legislature to ask the richest households to continue paying at the current level — which in no way diminishes their well being — in order to protect the struggling middle class. But, so far, that idea has been given short shrift.

Worse, some lawmakers — Republicans and Democrats alike — have pushed for repealing Measure 66 for those with income from capital gains. The only real winners would be speculators and the rich if income from capital gains were to receive special treatment. In 2009, over half of Oregon’s net capital gains income (54 percent) went to just 4,300 taxpayers who each made over $500,000 that year, the richest of the rich.

While proposals favoring the most comfortable continue to garner lawmakers’ time and energy, legislation that would expand the Earned Income Tax Credit (EITC) has languished.

Expanding the EITC would help over 220,000 low- and moderate-income families with children who support their families through work.

Thus, improving the EITC would help 51 times as many people as giving a tax cut to the richest of the rich who enjoy the majority of capital gains.

As disappointing as this session has been thus far for those who hope for broadly-shared prosperity, history tells us that great things can emerge in the last few weeks before adjournment.

Oregonians must insist that their elected representatives stand up for the priorities of the middle class. That began to happen with a large rally on May 20th at the Capitol, but more pressure will be needed in these final weeks of the legislative session to make it a reality.


Chuck Sheketoff is executive director of the Oregon Center for Public Policy.