Measure 104 is how corporations and special interest groups hope to keep their tax loopholes

September 5, 2018By Juan Carlos Ordóñez

[This commentary was first published in The Oregonian on September 5, 2018.]

In 2015, Google came knocking in Salem. One of its divisions, Google Fiber, was going around the country peddling its new gigabit broadband service. Google sent its lobbyists to work, and in Oregon they earned their keep: Lawmakers approved a new property tax break tailored for Google Fiber.

But things didn't play out as planned. Google Fiber fizzled. And the tax break created with Google in mind turned out to be loosely drafted and exploitable by others. Comcast alone stood to reap a windfall worth $15 million a year, with schools and local services bearing the cost. Earlier this year, the Oregon House voted to repeal the tax break, but the bill -- worked on by Comcast's lobbyists -- died in the Oregon Senate.

Next time that the Legislature meets in 2019, it may be much harder to repeal the ill-considered Google gigabit tax break. That's because Measure 104 on the November ballot threatens to create a constitutional obstacle to getting rid of wasteful tax breaks.

Right now, it takes a simple majority of lawmakers to reform or repeal a tax break. It takes 31 out of a total of 60 house members and 16 out of a total of 30 senators to make it happen. That's the same number of legislators it takes to create a tax break.

Measure 104, however, would raise the bar higher. The measure would change Oregon's Constitution to require a supermajority -- three-fifths -- of lawmakers in each chamber to reform or repeal a tax break. As few as 13 senators beholden to special interests could derail an effort to end a wasteful tax break.

Oregon's tax code already contains more than 350 tax loopholes and subsidies. There are tax breaks written with specific companies in mind, like Google. There are tax breaks that benefit big dairy farmers, the film industry and owners of mobile parks. There is a tax break that subsidizes the purchase of vacation homes and a tax break where most of the benefits go to business owners making over half-a-million dollars a year. The list goes on.

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That's not to say that all tax breaks are bad. Some are efficient ways to fulfill an important public policy goal. The Earned Income Tax Credit, for example, is a proven way to help low-income working families make ends meet.

But many tax breaks amount to nothing more than giveaways to powerful interests. Indeed, as CityLab's Richard Florida explains, there is a "wide body of research on the wastefulness of business incentives," whose main effect "is simply to deplete a community's tax base."

The Google gigabit episode is only a recent example of a poorly crafted tax break. There are others, including the infamous Business Energy Tax Credit, which saw its price tag balloon and give rise to a corruption scandal.

In short, making it harder to reexamine tax subsidies and discard them if necessary - as Measure 104 would do - is a terrible idea. It would allow a minority of lawmakers to ignore the will of the people, while transferring even more political power to corporations and special interest groups.

This November, voters can protect Oregon's Constitution and reject the special interest power grab by saying "no" to Measure 104.