Editorial Approval November 2024: Vote “no” to Measure 118’s false promise of free money

What would Oregonians do if they were given a check for $1,600 per person each year to spend as they saw fit? Pay rent or save for a child's college education? Maybe keep the money to cover surprise costs that arise in the worst of times? The possibilities are sure to stimulate all kinds of daydreaming.

But Measure 118, which would fund such rebates through a massive increase in Oregon's corporate minimum tax, is itself based on a lot of wishful thinking. Advocates contend that Oregonians overall will benefit from the rebate program, although state legislative analysts have warned that the proposed 3% tax on sales over $25 million will curb job and income growth. Proponents of Measure 118 also claim that businesses will not change their prices to finance the largest tax increase in Oregon history, even though the state predicts the opposite. And while they say the proposal is all about redistributing new tax money – about $7 billion a year – the measure is expected to divert $1 billion a year to the rebate program that would otherwise be on would have gone to the General Fund for education, health care, etc. public safety and other vital services.

Oregonians should heed warnings from state analysts, independent think tanks and elected officials about the unintended consequences of this action. A tax that drives up the price of medicine, food and utilities, undermines funding for vital services and funnels that money as reimbursements to all residents – regardless of income or need – is a formula for chaos. Voters should resist the misleading promises of free money advocates and vote “no” on this too-good-to-be-true proposal.

Oregonians have already considered and rejected a similar tax proposal. In 2016, public employee unions sought to impose a 2.5% gross receipts tax on companies with revenues of more than $25 million, with proceeds going to the General Fund. It lost 20 percentage points as Oregonians realized that both the level of the tax rate, which was far higher than in other states, and this particular mechanism of taxing companies on sales – rather than profits – could lead to painful price increases .

Proponents of Measure 118 argue that any fears are overblown and that the benefits for low-income Oregonians are worth the change. But they gloss over the complexity of the consequences of tinkering with tax policy, particularly the voting method. For example, they acknowledge that the additional revenue may cause some families to lose eligibility for federal benefits, but point out that the measure directs the state to ensure that these families are not harmed. Simply including such wording does not make it so. As Legislative Revenue Officer Chris Allanach told lawmakers last week, it's unknown how much the state would have to withhold to help affected families in up to a dozen different federal programs, and the complexity of resolving these issues is immense.

Proponents of Measure 118 also seemed baffled by the idea that the rebate program could impact state funding for public services, showing how ill-informed the measure is. “We simply don’t see how this can lead to a decrease in General Fund revenue,” said lead proposer Antonio Gisbert, arguing that their proposal to increase the minimum tax with the 3 percent gross receipts mechanism will bring in all new revenue.

What he ignores is that companies currently pay either the minimum corporate tax or a set percentage of profits – whichever is higher. Under Measure 118, larger companies that normally paid the set percentage would have to start paying the 3% sales tax instead. And because the measure earmarks those dollars for rebates, the General Fund would soon see a revenue decline of about $1 billion per year, Allanach explained in his presentation. That's just one of several ways Measure 118 is disrupting Oregon's revenue streams and costing the state even more.

Advocates again say lawmakers can easily fix such problems during next year's implementation. But it's not easy to untangle this mess of a measure or to do so in a way that's consistent with voters' expectations.

The lack of due diligence shouldn't surprise us, however, considering this campaign's funding comes almost entirely from a few wealthy Californians using Oregon to dabble in policymaking. The backers, including billionaire Josh Jones, philanthropist Gisele Huff and long-time San Francisco mayoral candidate Dylan Hirsch-Shell, all support the idea of ​​a universal basic income, in which the government would provide residents with regular payments that they can claim Can use as you wish. But they don't have to live with the consequences of this experiment. Oregon, which just rolled back drug decriminalization — another policy experiment forced on it by outside interest groups — should resist becoming a laboratory for outsiders' pet issues again.

No other state runs such a program. Proponents of Measure 118 try to compare this to a program in Alaska that distributes an annual cash payment to all residents, but this measure is nothing like it. The payments to more than 600,000 Alaska residents come from, rather than from, investment income from the Alaska Permanent Fund — a now $79 billion fund that consists primarily of holding a portion of royalties that oil companies have paid to the state over decades a gross receipts tax, the effects of which will linger back on the residents.

In defending the measure, supporters pointed out that the parent company of The Oregonian/OregonLive would likely have to pay this new tax if it passes. They also noted that the editorial board president is a member of the Portland Metro Chamber board of directors. Both are true. But the editorial board's position is based on the measure's obvious flaws and state financial analysts' projections of how much it threatens Oregon's economic health.

We are far from the only ones saying this. Take a look at the very long list of elected officials, nonprofits, corporations, and unions united in opposing this measure. They include Gov. Tina Kotek; the Republican and Democratic leaders of the state Senate and state House; dozens of other lawmakers from both parties; the left-leaning Oregon Center for Public Policy and Tax Fairness Oregon; the right-wing Taxpayers Association of Oregon; Oregon Business and Industry; Oregon Education Association; Northwestern Grocery Retailers Association; nonprofits, including the Coalition of Communities of Color and the Oregon League of Conservation Voters; and health groups including the Oregon Medical Association and the Oregon Dental Association.

Meanwhile, when asked in our editorial interview, supporters couldn't name a single elected official who supported the measure.

The opposition reflects an impressive display of unity from entities across the spectrum – political, geographical, membership and mission – all urging Oregonians to vote “no” on Measure 118. Voters should join them.

-The Oregonian/OregonLive editorial team

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