Reports from the Economic Front

a blog by Marty Hart-Landsberg

Will Oregon Lead The Way?

The strong support Oregon voters gave to Measures 66 and 67 (which raised taxes on the very wealthy and corporations) was a welcome development.  Of course, it is important to remember that the money they will generate just helps fill the spending gap AFTER the legislature had already been forced to slash billions from the state budget.  That said—the vote was a real victory and with potential national significance.

State and local governments all over the country are in trouble as a result of the recession and the enormous tax breaks they have been giving business.  As the Economic Policy Institute explains:

states face a two-year $357 billion budget shortfall for the fiscal years 2010 (which began in July) and 2011, while local governments face an additional $80 billion shortfall. The American Recovery and Reinvestment Act passed last February has provided much-needed relief, but its $106 billion in aid to states totals only about 25% of the $437 billion state and local shortfall. The rest of the $331 billion has to be met by spending cuts and tax increases.

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State and local governments cannot run deficits (unlike the federal government).  Therefore they can only balance their budgets in two ways: cut spending or raise taxes.  The reality is that cutting public spending will do far more harm to state and local economies (in terms of employment and quality of life) than will an increase in taxes on the wealthy and corporations.

So, what can we learn from the Oregon experience.  One is that people may finally be prepared to defend their interests in what has been a rather lopsided class war to this point.   Hopefully the victory in Oregon will encourage legislatures in other states to take a similar (and even stronger) stand against more giveaways at popular expense.

Another lesson that must be learned from the Oregon experience is that those with power are well aware of what is at stake. According to the Oregonian, “Tuesday’s tax vote left business leaders frustrated across Oregon, lamenting the bitter tone of the campaign and damage they perceive to the state’s economic climate.”

Lamenting the bitter tone?  Who are they kidding?  It was the campaign against the measures (led by “Oregonians Against Job Killing Taxes”) that falsely claimed public workers were going to enjoy huge raises and the state had enormous reserves hidden away, and refused to change its claims regardless of the evidence presented.

Among those business leaders most upset with the outcome are some of Oregon’s most well known (and beloved) corporate heads, for example Phil Knight (Nike) and Tim Boyle (Columbia Sportswear).  Knight gave some $100,000 to the anti-Measures campaign, Boyle approximately $75,000.

Here is what Phil Knight had to say about Measures 66 and 67 in an article he wrote for the Oregonian:

Measures 66 and 67 should be labeled Oregon’s Assisted Suicide Law II.

They will allow us to watch a state slowly killing itself.

They are anti-business, anti-success, anti-inspirational, anti-humanitarian, and most ironically, in the long run, they will deprive the state of tax revenue, not increase it.

The current state tax codes are all of those things as well. Measures 66 and 67 just take it up and over the top.

Hmmm—anti-success?  Anti-humanitarian?

According to the Oregonian, Intel, the state’s largest employer, “tried to steer clear of the tax fight.”  Why?  “One of the reasons we chose to remain neutral was to be in a position after the election to participate in discussions with business, government and labor leaders who want to shape the state’s future,” said Jill Eiland, Intel’s Oregon public affairs manager”.

One can only wonder as to what kind of future corporations have in mind for us.  Lets be clear—corporate taxes have been falling for some time in Oregon and nationally, in terms of rates and shares of tax revenue.  And profits have been rising.   And the great majority of us have suffered as a consequence of the policies that underpinned those trends.  A little push back is all Measures 66 and 67 represent—but as corporate responses make clear, those on top are determined to defend their gains regardless of the costs to the rest of us.

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