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Powell's City of Books
(The Oregonian / OregonLive Staff)
It may sound like a Silicon Valley vanity plate, but "IP 28" is a game-changing tax hike, one that will spark what state Sen. Mark Hass, D-Beaverton, calls "the most divisive political fight Oregon has ever seen."
After years of grandstanding and grand bargains at the Capitol, is anyone surprised that teachers, unions and the progressives at Our Oregon are in a fighting mood?
"I know the public servants who are supporting the measure fought very hard in the last two sessions for the Legislature to take on tax reform," says Labor Commissioner Brad Avakian, who is running for Secretary of State against Republican Dennis Richardson.
"The Legislature did not respond. When that happens, the initiative system fills the void."
Initiative Petition 28 is a gross-receipts tax designed to raise $6 billion in new state revenue per biennium.
It is strategically aimed at (a) C-Corporations with annual Oregon sales of more than $25 million, and (b) voters who have long thought the state's corporate minimum tax shouldn't be capped at $100,000 when schools and bridges are coming apart at the seams.
If the initiative becomes law, the Legislative Revenue Office notes, a C-Corporation with Oregon sales of $50 million "would pay a corporate minimum tax of $30,001 for the first $25 million in sales (the current tax) plus 2.5% on the second $25 million ($625,000) for a total minimum tax of $655,001."
The friendly neighborhood grocer with $350 million in Oregon sales? Under IP 28, its minimum tax would rise dramatically from $100,000 to $8.15 million.
At the Oregon Leadership Summit last December, Oregon Senate President Peter Courtney compared the upcoming brawl over IP 28 to Antietam, the bloodiest battle of the American Civil War.
"A bloodbath that will take us years to recover from," Courtney added this week. He is still campaigning, quixotically, to bring business and labor together in special session to cobble together a less contentious legislative referral.
Former Gov. John Kitzhaber is also no fan of IP 28. Earlier this month, he cruised onto Facebook to deride Kate Brown, his successor, for taking a cautious approach to the tax hike.
"With all due respect," Kitzhaber wrote, "I find it hard to understand how any public official or candidate for statewide office would be neutral on a measure that would bring about the most sweeping change in Oregon's tax system since Ballot Measure 5 passed in 1990."
I still find it hard to believe Kitzhaber abandoned tax reform when the state's top political strategists advised him, once again, that no amount of lipstick would gussy up a sales tax.
Yes, Brown is too cautious. No one mistakes her for a visionary. But before she joins Avakian and House Speaker Tina Kotek in championing IP 28, the governor hopes to mitigate its impact on 230 Oregon-based corporations, including iconic brands like Powell's Books and Les Schwab.
If she doesn't, Michael and Emily Powell may likely appear in a riveting 30-second TV ad, assuring voters the bookstore won't survive a 20-fold corporate tax increase.
In the absence of that appeal, the business community - which now pays the lowest state and local taxes in the nation, according to the Oregon Center for Public Policy - has the most ragged of arguments.
In a revealing April 29 podcast by the Portland Radio Project, Sandra McDonough, president of the Portland Business Alliance, said corporations will pass along all costs for the tax to consumers.
If businesses could pull that off, counters Robin Hahnel, a visiting economics professor at Lewis & Clark College, "they wouldn't care" about the tax increase.
In that same podcast, McDonough and economist Eric Fruits also lament that the Legislature can't be trusted to spend the additional revenue on education, health care and senior services.
"It's a slush fund!" Fruits says. "A blank check to the Legislature," McDonough adds. "What's the plan for how this money will be spent?"
Where, pray tell, are you afraid the money might be invested? On new teachers? Reduced class sizes? Hungry children? Seismic upgrades and safer bridges?
A better approach to foster care? The unfunded liability in Oregon's Public Employee Retirement System? Our devastated rural communities?
No, the initiative system isn't the best way to negotiate tax policy. But it fills the void when tax reform founders. When reasonable people can't settle their differences on paying their fair share. When high-quality education is a departure, not a promise.
When labor takes the offensive, and the business community, with little in the way of champions or fresh ideas, plays dead.
-- Steve Duin
stephen.b.duin@gmail.com