Novick does the math

In an Oregonian op-ed today, Steve Novick explains the impact of Bill Sizemore's big tax cut for the wealthy and Kevin Mannix's big prison spending measure.

First, Sizemore:

Sizemore's measure would reduce the amount of money in the state general fund -- by $550 million in the 2009-11 biennium and by $1.75 billion in the 2011-13 biennium. The bulk of that money would go to the wealthiest people in the state. The average tax cut for people in the top 1 percent of earnings would be more than $15,000, while the average for people in the middle 20 percent would be $1.

And Mannix:

Mannix's measure would increase spending on prisons by $250 million to $400 million a biennium. Since Mannix's measure is an unfunded mandate, that increase would have to be paid for by reducing the amount of money that would otherwise be spent on other general fund services.

Where does the state's money go?

54.3 percent goes to education (mostly K-12 schools).

15.8 percent goes to public safety and the justice system (prisons, state police, the courts).

22.7 percent goes to human services (the biggest chunk being regular old health care, but also including care for seniors -- such as assisted living -- and child protective services).

7.2 percent goes to everything else (environmental and natural resources -- such as state parks -- economic development, the Legislature itself, the Department of Revenue and the rest of state government).

And now, the math:

What do those numbers mean? They mean that it's not possible to slash taxes for wealthy people or to spend lots of new money on prisons without affecting education, health care, senior services and child welfare. Repeat: It's not possible to slash taxes for wealthy people or to divert money to prisons, without affecting education, health care, senior services and child welfare.

That's not spin; it's arithmetic. There simply isn't enough "other" spending to cut. The entire "other" budget for 2007-09 is less than the amount of the Sizemore tax cut, once it's fully implemented.

Read the rest. Discuss.

  • Eric Parker (unverified)
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    Now you see why any and all initiatives that are brought forth by Sizemore and Mannix must get an automatic NO vote. Just vote NO on everything and we won't have to worry about these poorly thought out issues.

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    Thanks for the numbers, Steve. Now I have some concrete numbers to use when I'm out talking to people. Now I just have to get over the "oh there's so much waste there already, they can make the cuts" line that I hear a lot out here.

    I think the key is making sure that people out in areas like Gresham understand that this isn't going to do anything to help them - on the contrary, it'll hurt them.

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    This was a great public service. Thanks, Steve.

    If only more Democrats had the courage to stand up and itemize and defend the public services and expenditures that our taxes support.

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    Thanks Steve. Now if we can continue to pound this into the public consciousness, we can defeat Sizemore. Any way to tie this anchor to Smith?

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    Thanks, Steve!!

    Eric's articulated philosophy is well worth committing to memory and practicing with religious fervor. But it's definitely a solid service to Oregonians to be reminded of exactly why everything churned out by Sizemore and Mannix deserves to be dismissed out of hand. The odds of accidentally tossed out a baby with that bathwater are vanishingly small, as history has proven time and again.

  • oregonj (unverified)
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    These calculations very helpful.

    For instance, the regressivity ratio of this measure is 15000 to 1.

    This is truly class warfare on the working people of Oregon.

    Someone needs to develop an initiative that repeals all of the deductibility of the federal income tax, and substitutes full deductibility of the employee portion of the payroll tax.

  • Mike (unverified)
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    Sizemore & Mannix are like two-bit Grover Norquists. Surely they're trying to bankrupt the state.

    Passage of these initiatives would relegate us to the bottom tier of states in all sorts of critical categories.

  • Rose Wilde (unverified)
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    Novick put in an appearance at the Eugene City Club last Friday to ask a question of the presenters from Healthy Democracy Oregon.

    They were presenting a proposal for Citizen's Initiative Review -- a public process allowing a slate of randomly selected Oregonians (then adjusted to be representative of state's demographics) to review ballot measures and present their recommendations in the voter guide and other media. Read more here. HDO will do a trial run of CIR September 21-25 if you want to check out the process.

    Novick brought up the very same point: some people only read ballot titles before voting, so the titles themselves should be more indicative of the trade offs.

    Nice to see he's staying in the game.

  • C.B.H. (unverified)
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    This is truly class warfare on the working people of Oregon.

    True enough and Sizemore and his ilk are scumbags. But I seem to remember the elitist, low-quality folks at Blue Oregon and in the Democratic leadership in the legislature viciously waging class warfare on the working people of Oregon last fall in their lusty support for Measure 50 which explicitly was about making lower-income, working people as a group pay a greater share of the cost of health care for children.

    Of course, those are same people who continued their class warfare on working people of Oregon during the 2008 experimental session. They stood by saying nothing when Merkley and the rest of the Democratic leadership told those who actually cared about funding health care for children and were pressuring them to do something to shut up, and explicitly took off the table any legislative consideration of any tax or revenue raising measures which would fall on the better off to support health care for children.

    Instead, those same Democrats arrogantly said the poor should get in line for the lottery for the few spots on the OHP they would condescend to fund without asking the better off (like them) to do their share, and then tried to spin it as how grateful the people of Oregon should be they were condescending to do that.

    And don't forget Jeff "I'm against making the better off pay more" Merkley is also against raising the long term capital gains. He believes the rich are entitled to let their money work for them and shouldn't have to pay the same tax rates as those of us who have to earn our income by working for ourselves.

  • Bert Lowry (unverified)
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    Well, I suppose that's one way to look at it.

  • Runtmg (unverified)
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    I believe that history has shown that these tax cuts do nothing but destroy government's ability to provide services to the state. We have a long history of tax bills that promised more money in working families pockets which turned out to just cut services elsewhere.

    The scary thing to remember though is that we are facing a downturn and people may vote for the tax cuts on raw emotion and not on reasonable well constructed analysis like Novick does here.

  • Eric Parker (unverified)
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    "This is truly class warfare on the working people of Oregon"

    Not really. It just happens to be an unfortuneate byproduct of not very well thought out ideas. Sizemore and Mannix initiatives are nothing more than thier own personal reactions and attacks to selfish and broken values they live with every day. They take thier fights personal and don't really care who gets involed in the collateral damage they create as long as they get their way int he end.

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    C.B.H.: Measure 50 which explicitly was about making lower-income, working people as a group pay a greater share of the cost of health care for children.

    No. Measure 50 was explicitly about making smokers pay for the health care costs they impose on the rest of society. And the last time I checked, there is no association between "working" and "smoking".

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    Not really. It just happens to be an unfortuneate byproduct of not very well thought out ideas. Sizemore and Mannix initiatives are nothing more than thier own personal reactions and attacks to selfish and broken values they live with every day. They take thier fights personal and don't really care who gets involed in the collateral damage they create as long as they get their way int he end.

    Your points are well taken Eric, but I would add that the willfully ignorant (like the guys you cite) are often manipulated by the previously mentioned class warriors who design ideas with total malice and understanding that they know will appeal to folks too lazy or inept to do their own thinking.

    Oh, and in keeping with the post primary zeitgeist here on Big Blue, shouldn't I slam Steve Novick for some sin (real or imagined) at this point?

    Just wanting to stay trendy, you know.....

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    Steve,

    A cigarette tax that was dedicated to smoking cessation and prevention and possibly it a mechanism could be figured out to offsetting the specific costs of smoking related diseases would be one that "paid for the health care costs they impose on the rest of society."

    I know that TJ was making a version of the "money is fungible" argument, essentially that "healthcare costs are fungible," but I disagree. One of the problems about making children's health care dependent on a tobacco-based revenue stream is that it creates a budgetary conflict of interest over smoking cessation and prevention, and thus over reducing the healthcare costs associated with smoking.

    Demographically it is true that the distribution of smokers is skewed toward lower income and working-class people. Not exclusively by any means, but the cigarette tax was a flat excise tax that would be paid disproportionately by people at the lower end of the income distribution.

    Now, one can argue that the goal of insuring all children is important enough to override concerns or critiques based on the (unsystematically, since many lower income and working class people don't smoke) regressive character of the tax, as we know, since it was vociferously argued many times in this same venue of recycled electrons last year. But when not faced with that as the choice that's been put on the table, I'd prefer cigarette taxes that really were directed to the health delilitations, premature deaths and social-economic costs, and a different funding mechanism for ensuring all children access to high quality preventive and treatment health care.

    Further, I would argue that there are a number of different "cultures of smoking" that persist. It's a far cry from the 1950s or early 1960s when smoking was almost on par with short hair for men as a matter of social convention, in many contexts non-smoking was seen as a possible sign of prudishness or extreme religiosity. Though even then there were different smoking subcultures. But cigarettes were in many circumstances tokens or ways to establish a small bond across social differences, and refusal sometimes the opposite.

    Today the shoe is on the other foot. The sharing/bonding effect is still there, maybe intensified, but operates as a kind of specialized, restricted currency.

    One example is that there is a certain culture of smoking where kids take it up or deepen it while in college for associations of edginess or non-conventionality, and maybe a partly overlapping one among some people who see themselves as artists or musicians in some genres or writers.

    And there are working-class cultures of smoking that are about on-the-job sociability. They are associated with breaks and getting off of work and stress relief of a sort. For instancee, anecdotally, at our local Safeway they are remodeling, expanding into what had previously been satellite retail space in the same structure. There was a bench near where this was going on, away and around the corner from the entrance, under a roof, near the loading dock, where workers on break would gather to smoke. The bench has been moved, and it is a topic of conversation among store workers.

    Such gatherings of workers outside of relatively large workplaces are pretty easy to find.

    At a slightly more general level I think smoking can be one of a number of responses by working class people to feeling put upon by upper middle class and wealthy people telling them what to do or how to live. That starts with with bosses, but makes its way outward to perceived lifestyle elitism and condescending judgmental attitudes. Desire to emulate that attitude may creep into the artsy-intellectual variants mentioned above.

    But again, this is not systematic, probably a majority of working class people also don't smoke.

    Which is what makes the cigarette tax, while regressive, much less of a systematic class war phenemenon the Sizemore-Mannix one-two punch of pseudo-libertarian conservative taxes breaks for the rich to reduce common social spending, and authoritarian conservative prison expansion at the expense of other social needs, especially in a budget constrained by the Sizemore cuts. This is indeed class warfare.

  • Eric Parker (unverified)
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    By the way...has anyone realized that the Mannix crime measure and the crime measure given to us by the legislature will cancel each other out? You can vote YES on one or the other, but not both. It is simular to two measures years ago (the issue escapes me at the moment) that were defeated simply because you can go NO on one and YES on the other but not YES on both. But - you can go NO on both which defeated both measures. Seems to me that this scenario will play out for Mannix and his "get tough" attitude. So - even though Steve's data is extremely good to combat Mannix, the fact that there are competing measures on the same issue will be an even more profound effect in getting Mannix's diatribe defeated.

    Steve's data is great - competing measures are better.

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    Which is what makes the cigarette tax, while regressive, much less of a systematic class war...

    Except that M50 would have exempted the one form of tobacco consumption which reflects the highest socio-economic class of any form of tobacco consumption - cigars.

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    I know that TJ was making a version of the "money is fungible" argument, essentially that "healthcare costs are fungible," but I disagree. One of the problems about making children's health care dependent on a tobacco-based revenue stream is that it creates a budgetary conflict of interest over smoking cessation and prevention, and thus over reducing the healthcare costs associated with smoking.

    That's a very long-term problem, one that sacrifices child health care for a decade or more, on the concept that eventually cessation by enough people would drain the flow of money to inadequate levels. The bill itself accounted for that, however, essentially "over-taxing" as I understand it so that expected downturns in smoking rates wouldn't cause immediate shortfalls.

    If by "health care costs are fungible" you mean to say that the state pays for both inadequate child health care and inadequate smoker care, and that I think pulling resources from one group makes sense based on the charges they incur to the system, that's generally accurate. It is legitimate to consider funds not spent when figuring your bottom line; while shrinking smoker health costs don't literally create money to pay for child health, they do reduce the overall burden of expenditures, and make finding the funding for child health that much easier. Not driving my car doesn't pay for my groceries per se, but it turns out there's more money left in my wallet when I get to the store and I haven't taken out a bunch for gas already.

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    TJ, you're only talking about declining tobacco revenue due to people quitting or not starting because of the extra cost, I think.

    The conflict I am talking about is twofold.

    First, by making child health insurance dependent on the tobacco revenue stream, rather than a fully shared social cost in the progressive tax system as it should be, it diverts this tax that singles out a particular subpopulation from its most appropriate uses, which would be ones that benefit that population or potential members of it -- smoking cessation and prevention -- or more directly compensates for the added health costs created by smoking.

    Second, it creates subtle disincentives to fund adequately smoking cessation and prevention. What happens to the "overtaxing" if smoking prevalence declines more rapidly than the cost effects alone, due to effective public health interventionss?

    I'm not saying this is a huge disincentive, but it does make a difference between having no reason not to have cigarette taxes or other revenues pay for reducing smoking prevalence, and having at least one reason.

    In the end I voted for M50, and, having thought it through, if the legislature chose to confront me again with that IMO erroneous approach, I'd do so again.

    But next time around, instead of arguing about the regressivity, I'd be advocating immediately that once the insurance system for kids was set up, that it be sourced to a different revenue stream, and that the now raised tobacco tax should be redirected to its proper uses in reducing smoking prevalence and compensating for smoking related costs to the health system.

    But since the approach taken proved a failure, it seems to make sense not to repeat it, but to start again and try to do it right from the beginning.

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    You can vote YES on one or the other, but not both

    Wrong. You can vote yes on both. A vote on one doesn't affect your vote on another. They'll both be counted as you cast them.

    In general, courts have held that when two simultaneous initiatives modify the same section of the law - the one that gets the most votes wins out.

    This is a regular occurrence in California. It will, however, take a judge to sort out.

  • Eric Parker (unverified)
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    "It will, however, take a judge to sort out"

    If that's the case, then just vote NO on it all and keep the courts out of it. The courts have better things to do and more important items to decide than to piddle around with lesser squabbles over an initiative.

    "You can vote yes on both. A vote on one doesn't affect your vote on another. They'll both be counted as you cast them"

    That's not logical or very intelligent on an issue like this. If they are both for a same issue, and one is slightly different than the other, voting YES on both shows that your not reading the full text of the issues in an informed way. I know many people will go the 'one or the other' route becuase the measures together make it look like it is a choice between one or the other and it will be natural for the general public to do so. The public at large are more intelligent than we give them credit for. Voting YES on both and letting the courts decide later (even though they have said "the most votes wins" - someone will sue over that in time - I guarantee it) is a waste of the court's precious time and efforts that are needed elsewhere on more important issues. It is also a waste of your votes if you do vote YES on both.

    Its best just to vote NO on everything and we won't have to worry about wasting the court's precious time.

    Just vote NO on everything. If it is this difficult to sort out, it's not worth passing.

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    Eric,

    I'm inclined on one level to vote no because I don't like either of them. But the legislative one is less harmful than Mannix's. So what if my "no" vote on that contributes to Mannix's law getting more yes votes if they both pass? That's the dilemma.

    In general I don't think I understand you all that well a lot of the time. For instance, you use the word "uptight" in very idiosyncratic ways as a pejorative that I just don't know what you mean.

    But I pretty much understand your vote no on everything views, I think. However, if we all just vote no individually to oppose the initiative system as it is, without having some organized way to publicize that that's what we're doing, that motivation won't be recognized.

    If you boycott something without making the fact you're doing so known, boycotts don't work.

  • (Show?)

    "it diverts this tax that singles out a particular subpopulation from its most appropriate uses, which would be ones that benefit that population or potential members of it -- smoking cessation and prevention -- or more directly compensates for the added health costs created by smoking."

    I disagree those are the most appropriate uses. When a single pack costs the state $8 in public health care costs, recovering that money should be the primary directive. As for what to do with that money, the same point applies in the reverse that it did earlier--health care costs are health care costs no matter who incurs them, and so recovering that money pays for both smoker care and child care.

    However, I don't think it's very difficult to analyze the difference between a circumstance that is choice-based and generally adult-driven...and one that involves children with no responsibility for their lack of health care, and conclude that covering children is a better buy with limited resources than working on smoker cessation.

    As for Kari's suggestion that this will go to the courts, it was my recollection from discussions with Rep Shields that the legislative version directs that it the initiative with the most votes will carry. Perhaps if Chip is listening, he can clarify.

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    Oh, and Chuck Butcher has pointed out that health care costs related to alcohol are even higher, and I would have no problem paying an extra dime per bottle or draft in order to insure all Oregonian children. But that liquor lobby appears to be more powerful than the likes of Jeff Merkley and Peter Courtney, I guess.

    At least alcohol is usable as intended without ill effect. If you smoke tobacco as the product is designed, you will die. There is no safe level of tobacco; it's simply too addictive (the nicotine is, anyway).

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    All reasonable arguments, TJ. Curious about your views on the leverage of smoking prevention (generally youth oriented)? Anyway, I'll let you have the last word, either if you reply, or in the sense of not arguing against you further.

  • Jody Wiser (unverified)
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    Oregonj says: "Someone needs to develop an initiative that repeals all of the deductibility of the federal income tax, and substitutes full deductibility of the employee portion of the payroll tax." Great idea -- a far more progressive deduction which one could also run with the excuse that it's "double taxation." No, Sizemore would never sponsor that -- he wants both tax cuts for the rich and smaller government. A deduction for payroll taxes might even give Oregon a progressive tax structure. Too bad we can't afford that idea either. Full deductibility of federal taxes is far from what most states find reasonable. Only 3 of the 41 states with broad-based income taxes permit taxpayers full deductibility of federal taxes paid -- Alabama, Louisiana and Iowa. Two other states are like Oregon and allow a limited deduction. Oregon currently allows up to $5,500 (indexed) of federal tax to be deducted, reduce that to $3,000 and we'd have $70 million a year to pay for healthy kids. Reduce it to zero, as most states do, and you add $400 million a year in revenue. That'd cover Maddix's prison idea, I guess. The various proposals to add a sales tax in Oregon promise about this much additional revenue. It's suppose to get us to close our eyes to the regressive nature of the proposals, which always seems to marry the regressive sales tax with even more regressive cuts in capital gains and estate taxes. Just the simple step of removing all federal tax deductibility - no new tax collection system, no need for rental relief and property tax offsets -- and you add as much stability and adequacy as any of the sales tax proposals.

    Hum, would the Revenue Restructuring Task Force consider that? Would a 3/5 majority of Democrats vote for that?

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