[A version of this commentary first appeared in the Mail Tribune.]
To find the way forward, it often helps to look at the past. That’s certainly the case when it comes to tax policy. Rather than rely on preconceived notions, it’s essential to examine the real impact of significant policy changes.
An important change in tax policy took place a decade ago this month, when Oregonians approved a measure raising taxes on the rich. Today, the success of that measure makes a powerful case for enacting a “millionaires’ tax” as a way to improve the well-being of Oregonians in an equitable way.
When the Oregon legislature convened in 2009, the state and nation were in the throes of the Great Recession. The economic crash had battered state finances, prompting the legislature to make painful budget cuts. But to prevent greater damage to schools and other vital public services, the legislature also enacted a pair of tax increases, including one focused on high-income Oregonians. This became Measure 66, after opponents gathered enough signatures to refer it to the ballot.
Measure 66 proposed creating new tax rates for high-income Oregonians — the richest 3 percent of Oregonians. The measures initially created two new tax brackets above the existing top rate of 9 percent. For couples, the measure set rates of 10.8 percent for income above $250,000 and 11 percent for income over half-a-million dollars. For single filers, the new tax brackets kicked in at half those income levels. After two years, both top rates would come down to 9.9 percent — still above where they had been.
Corporate and deep-pocketed interests pulled out the stops to kill the measure. They launched a campaign of misinformation, claiming the measure would harm economic growth, cost jobs, and cause the rich to pack up and leave. Nike billionaire Phil Knight called it “Oregon’s Assisted Suicide Law II.”
The doom and gloom rhetoric, however, ultimately failed. On Election Day in January 2010, Measure 66 passed easily.
Today, it’s clear voters made the right choice. Contrary to the predictions of economic suicide, Oregon saw its economy blossom in the years following the vote. The most recently-available data shows:
- Oregon ranked fifth among all states in the growth of personal income from 2010 to 2018.
- Over the same period, Oregon ranked fifth in economic growth, adjusted for population size.
- Oregon’s unemployment rate has been at record lows over the past few years.
- From 2010 to 2017, the number of taxpayers reporting annual income of $1 million or more grew faster in Oregon than any other state.
To be clear, this is not to argue a causal connection between the higher tax rates and shiny economic numbers. Rather, the data illustrates what decades of research have shown: Higher taxes on the rich do not impede economic growth, investment, or job creation. And tax rates have minimal impact on where people choose to live.
Also, these figures are not a sign that all’s well with Oregon’s economy. The gains have mainly flowed to those at the top. While the income of the richest Oregonians has set new records, that of the typical Oregonian has barely budged. Meanwhile, the costs of essentials that allow families to live in dignity and prosper — housing, health care, child care, and higher education -— have outpaced earnings. As these costs have squeezed family budgets, Oregon has done relatively little to make these essentials more affordable.
Finally, despite the higher top tax rate left in place by Measure 66, it would be a mistake to assume that the rich in Oregon pay proportionately more in taxes than the poor. They do not. When you factor in all state and local taxes, it is the poor who pay a higher share of their income in taxes than the very richest Oregonians.
When you couple today’s reality — vast inequality, economic stress for most families, state underinvestment in essentials, and an inequitable tax system — with the knowledge that Oregon’s economy can excel with higher taxes on the rich, it points the way forward: Raise taxes on those benefitting the most from the economy to improve the quality of life for all Oregonians.
The time has come for an Oregon millionaires’ tax.