A Few Dollars More for a Few Good Causes

Steve Novick


This week the Legislature will vote on proposals to limit the severity of the cuts we are going to see in education, health care and public safety by raising more revenue from corporations and the wealthy.  I wish legislative leaders well in rounding up those votes. (Message to any legislator who voted for the gas tax: There is no political reason to vote no now. If you’re going to lose your next election on taxes, you’ve already lost.  Voting to raise the gas tax is a lot more politically dangerous than voting to raise taxes on wealthy individuals and corporations.  So you might as well vote to save schools and seniors.) 

I write today to suggest that the Legislature go a little bit further in terms of revenue-raising, taking some small, politically easy steps to address a few low-budget but important causes.  I propose that we stop giving a tax break to companies that export jobs and money to overseas tax havens; that we limit the Oregon Lottery’s tavern subsidy program, by adopting the suggestions of auditors and of Governor Kulongoski; and that we stop subsidizing wealthy Oregonians’ campaign contributions.  I propose that we use a fraction of that money to bring Oregon’s rape laws into the 20th (not 21st) century; to restore the state teacher mentoring program to the level originally proposed by Governor Kulongoski; and to avoid cuts to the Healthy Start program, which helps to prevent child abuse before it starts. Since these revenue proposals would raise about $75 million, and these three causes would cost less than $12 million, there would be $63 million left over to help balance the budget.

I should note that I am mimicking, and in part duplicating, an exercise the Oregonian did with a few of its writers a few weeks ago. Newspapers are good things. Don’t let them die. Anyway:

First of all, it’s outrageous that because of a fiscal impact of a less than a million dollars over the next four years, a bill to bring Oregon’s rape laws into the twentieth century is now blocked.  Current Oregon law, as my friend Sue Castner observes, “rewards rapists for good victim selection.”  As the Oregonian put it:

“A young woman at a college party gets drunk and blacks out. Then she's raped.

“Oregon is one of 18 states where prosecutors and courts are allowed to consider how she became intoxicated. Did she drink too much? Did somebody slip a drug into her beer?

“It matters because, under current law, if a woman is incapacitated by her own actions, the person accused of attacking her could be charged only with sex abuse in the second degree and not with the more serious crime of first-degree rape or sex abuse, which carry mandatory minimum prison sentences.

A bill generating much debate in the Legislature would change the law so that it wouldn't matter how a rape victim became vulnerable to attack.”

Attorney General John Kroger rightly thinks that it sure as hell shouldn’t matter. "In the last 50 years, we've seen dramatic change in the law throughout the United States in which the focus of attention is no longer on the victims, their conduct, how they are dressed, and shifted solely to the perpetrators," Kroger has said. House Bill 2343 would modernize the law.  But it’s bottled up in Ways and Means because of a fiscal impact of $125,000 in 2009-11, moving up to $700,000 in 2011-13.

Where could we get the money?  Well, how about limiting the political contribution tax credit, phasing it out for taxpayers making over $100,000?  The tax credit will cost $15 million in 2009-11. We know that more than half of it will go to households making over $70,000. So I bet at least a sixth will go to households making over $100,000. So there’s $2.5 million – enough to py for fairness to rape victims, with plenty to spare, 

Then there’s the teacher mentorship program,  (I’m stealing this, in part, from Betsy Hammond at the Oregonian.)  We know that many teachers have a tough time in their first year.  We lose a lot of teachers in their first few years. A mentorship program, linking new teachers with experienced teachers who provide them advice, guidance, support, has had promising results.  Governor Kulongoski proposed $10 million for the mentorship program for 2009-11. The co-chairs budget cut that to $2.5 million. 

Where could we get the $7.5 million? How about cutting the payments the State Lottery makes to tavern owners for housing video poker machines?  The Lottery money is supposed to be used for education (and economic development).  A 1994 audit said that the video poker taverns would be doing fine if they got 15% of the profits.  Governor Kulongoski echoed that recommendation a few years ago. One tavern owner once described the ‘work’ tavern owners do with respect to video poker as: “you take the money out of the machine, You go and put it in the bank.”  Currently, according to the Oregonian, the tavern owners are getting 24% of the take – about $80,000 per tavern per year, totalling $162 million last year.  The state’s contracts with the taverns are up for renewal in the middle of next year.  If the Legislature passed a law limiting their take to 18%, that’s $40 million. Plenty for mentorship.  With lots left over.

Finally, let’s talk about the Healthy Start program – a program that identifies ‘at-risk’ families of newborns and sends social workers out to lend support and parent education. Though these families have been flagged as especially at risk for abuse and neglect, the incidence of abuse and neglect in Healthy Start families is smaller than in the general population. But the legislative meat-axe is going to cut the program by 20% - $4.2 million. 

Where can we get the money? How about disconnecting Oregon from the part of the Federal tax code that rewards companies for shifting jobs and income overseas?  As the State’s Tax Expenditure Report explains:

"When a U.S. firm earns income through a foreign subsidiary, the income is exempt from U.S. corporate taxes as long as it is in the hands of the foreign subsidiary. At the time the foreign income is repatriated, the U.S. parent corporation can credit foreign taxes paid by the subsidiary against U.S. taxes owed on the repatriated income. Because U.S. firms can delay paying U.S. taxes by keeping income in the hands of foreign subsidiaries, it provides a tax benefit for firms that invest in countries with low tax rates."


Tax experts say that often companies artificially inflate the percentage of their profits earned in low-tax countries through something called ‘transfer pricing’ – playing games with the prices that the American branch of the company and the foreign subsidiary charge each other for intra-corporate transfers of goods and services. That’s one of the reasons Senator Wyden has proposed ending the Federal deferral. But Oregon doesn’t have to wait for that: It can ‘disconnect’ from the Federal law – and raise $33 million. Plenty for Healthy Start, with lots left over. 

I should note that there’s little or no, or even negative, political cost to these proposals.  Subsidizing the political contributions of the wealthy, and subsidizing sending money overseas, aren’t exactly popular causes.   The Oregon Restaurant Association won’t like cutting the tavern subsidy, but they don’t like Democrats anyway,

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    How rational. Any of this in the hopper?

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    I propose that we stop giving a tax break to companies that export jobs and money to overseas tax havens

    I like that. But I'd rather see an across-the-board tax hike and then tax breaks written in to reward companies that bank locally and employ locally.

    “Oregon is one of 18 states where prosecutors and courts are allowed to consider how she became intoxicated. Did she drink too much? Did somebody slip a drug into her beer?

    How 'bout the guy? Did he drink too much? Did somebody slip a drug into his beer? Both happen ALL the time, far more often than a lot of people might think.

    God knows that diminished capacity is very much part of criminal law in other settings. Equal protection under the law seems to me to require that diminished capacity be allowable evidence for both parties or for neither party.

  • TroyB (unverified)
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    I think these ideas are great and wish our legislature had the courage to implement them.

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    Steve, I’m with you on increased revenues from limiting the political contribution deduction and limiting lottery payments to taverns. I’m for all the funding increases you propose.

    I’m not with you on changes in the taxation of foreign subsidiaries of US corporations and would propose two more high priority sets of legislation.

    First, we do not want to drive the headquarters, or operations, of companies with substantial foreign businesses out of Oregon. With 80% of global economic growth in the next decades forecast to come from emerging markets and China’s economy forecast to be twice the size of the US economy in 2050, Oregon needs to attract international companies, not scare them away. Oregon’s future economy will prosper to the extent that we can innovate and can sell our goods and services in these emerging markets. International trade is our opportunity for economic growth and we are not now well prepared to seize it.

    Second, to prepare Oregon to compete in the emerging global markets I would spend $3 million to expand Mandarin programs in Oregon’s K-12 public schools (here for details) and I would pass HB 2719 (here) to create the Go Global High School Study Abroad program. HB 2719 would permit school districts to use state and local funds to pay for high school students to study abroad. It would need no additional state funding.

    Legislative Democrats should vote for an economic future for Oregon.

  • Buckman Res (unverified)
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    ”Well, how about limiting the political contribution tax credit, phasing it out for taxpayers making over $100,000?”

    Better yet, eliminate it altogether. Phasing it out only for taxpayers making over $100K politicizes it. How did a tax credit like this get on the books in the first place?

    What does it do besides help corrupt the political process. Junk it.

  • Greg D. (unverified)
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    Re: Lottery payments to bars. The ONLY reason that many Portland Metro "low life" taverns continue to exist is due to what they make from the Oregon Lottery. Ever wonder how that skeezy strip club in your neighborhood stays in business? I'll give you a hint - it is not the microwave pizza for 99 cents or the $2.00 happy hour PBR or the 48 year old strippers, it is the Oregon Lottery subsidy. End that and you close down a lot of marginal taverns in Portland.

    I leave it to you to decide whether that is good or bad. For myself, I enjoy the Oregon constitution protections and freedom of expression, etc., etc., but I have a hard time understanding why the Oregon State Lottery would want to subsidize my vices.

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    Both houses of the Oregon Legislature have already voted to abolish Oregon's tax credit for small contributions to political campaigns, effective January 1, 2014. This will make Oregon politicians even more dependent on large contributions from corporations, unions, and wealthy individuals.

    The political tax credit is one of the few decent features of Oregon law pertaining to political campaigns. Oregon is one of only 2 states with no limits on campaign contributions for state and local races, now that Illinois and New Mexico have adopted limits this year. The amount raised and spent on campaigns for state and local offices in Oregon has increased from $4 million in 1996 to over $40 million in 2006.

    The political tax credit gives back up to $50 per person per year (or $100 per couple filing a joint return) for any contribution to a political campaign in Oregon. It slightly levels the playing field by allowing non-wealthy persons to make political contributions without having to skip meals or miss paying the rent.

    But both houses of the Oregon Legislature have passed HB 2067, which abolishes the modest Oregon political tax credit, effective January 1, 2014.

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    The amount raised and spent on campaigns for state and local offices in Oregon has increased from $4 million in 1996 to over $40 million in 2006.

    And what was it in 1992 and 1994? Hardly seems statistically legitimate to start with 1996, an anomalous year to be sure.

  • Buckman Res (unverified)
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    “The political tax credit...slightly levels the playing field by allowing non-wealthy persons to make political contributions without having to skip meals or miss paying the rent.”

    “Non-wealthy persons” are the last ones who should be throwing hard-earned money away on politicians who manipulate and deceive in order to hang on to power.

    It’s no different than a low-income person who spends what little earnings they have on alcohol, tobacco, or lottery tickets.

    If they’re foolish enough to throw their money away in this manner it’s their right but lets not encourage it by giving them tax credits for the activity.

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    I'll be darned. I talked to Ginny Burdick about the tax credit just a week or so ago - I had no idea it was on the verge of abolition. Hm. I would have preferred means-testing and / or suspension. Kari's right about 1996 not being a fair starting point - there was a short-lived $100 limit on contributions that year.

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    How 'bout the guy? Did he drink too much? Did somebody slip a drug into his beer? Both happen ALL the time, far more often than a lot of people might think.

    Kevin, I hate to say it so crassly, but shut the hell up. Your comment is so far removed from reality that it's absurd. I've been at a large state university for the last four years, so let me crack an egg of knowledge on you.

    Yes, guys do get drugs occasionally (and always accidentally) slipped into their drinks. You know what happens to them? They walk home and pass out.

    And when a guy drinks too much, he should still absolutely be held accountable for his actions. Does anyone get a pass for driving drunk because, "uh, your honor, I don't even remember driving that night. I was hammered!" I don't think so.

    With women, being severely intoxicated in a party atmosphere can mask a would-be assailant's intentions. It also makes it much easier for a guy (whether drunk or not) to take advantage of a woman in a number of ways, knowing that it will be her word against his in court.

    Even worse, most college rapes are never reported. Girls feel responsible, like they're sluts and that they're powerless. I have known women who have been raped and for you to discount it so flippantly is pretty deplorable.

    Our sexual autonomy laws in this state and country need to be drastically overhauled. I agree with Kroger in supporting mandatory minimums for solely rape and murder, and I think the rape side of that should be significantly tightened.

    What I think Oregon's top three public safety concerns should be: meth, rape and human trafficking. I'm sorry that so many lawmakers disagree with me.

  • dddave (unverified)
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    Steve, Do you have any idea, at all, how much business is done overseas that is originated in Oregon? It is not just the Nikes, Tek, Xerox, Columbia Sportswear. In the tech sector even the smallest companies go offshore for electronic manufacturing. This is "sending jobs offshore" to you? If you could get your mind off tax revenue for just a second, perhaps you would realize that tax revenue actually comes from people making money somewhere in the economic chain. But alas, as legislators, revenue is the crack we all need. Could we have SOMEONE, ANYONE, put forth some sort of a plan that would actually stimulate jobs and businesses moving TO Oregon? We are so blessed that in spite of all the trouble with Oregon, people still like to live here, and work here (when possible, sorry you 13% unemployed). Steve, your one sided "revenue whoring" attitude completely misses all the points. How about a plan where business taxes are reduced or eliminated based on what percentage of your total employees are here in Oregon? Another break if you HQ is here? Oh, but no, the filthy corporate heathens, they are evil, and only pay a minimum tax. I mean, screw all the economic benefit to personal incomes etc, right? Again, so thoughtfully just running us out of business, the democrat way. Thanks guys, for helping us all out, out to the unemployment line.

  • Kurt Hagadakis (unverified)
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    Hmmm. From a fistful of dollars to a few dollars more. Is there no imagery that the parties won't rip off each other?

    You don't know jack about overseas contracts. You might be outsourcing and not even know it. Ever pay headhunters? Consulting firms? Temp agencies? LOTS are now using job freelance sites to do the work with Indians and Pakistanis working for $1-$2 hour. They get a good looking whitey to parade around to the client, assuring you that all work is done "at our offices". "In Portland". I don't understand how the break makes it not-a-lie, but you always hear that. The reality is that the actual work is done behind the scenes and delivered by the American stooge. I personally saw this at OLCC, where- this is absolutely true- they left their main data server with the firewall down all night long and went home, so the contractors in India could upload their material. They paid me for 2 days to make ad hoc, on site code changes. They then told the Indian consultants that they hadn't delivered, needing my help, and paid them nothing. 6 months earlier, I had interviewed there for a full-time position that would have been responsible for that work, but they met a 3% budget cut goal with that little outsourcing plan, and kept their 7% pay raises and never filled the position. Think about that next time you cross the Milwaukie city limits and see their whore, er, warehouses.

    The model is common. Even further out there is the more and more common practice of requiring "samples", "mock-ups", and "visual sketches" for interviews. They simply rip it, never fill the position, and it's business as usual.

    So there's your tax dollars being outsourced, being used to deny employment to a qualified Oregonian. Clue: minimum wage, labor laws, what you see in an interview...none of it is where the rubber hits the ground anymore. Those things are simply what legislators do to make you think they deserve your money and to look occupied.

  • ktunnel (unverified)
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    thanks for ktunnel

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