The Fairest of them All

By Rep. Mary Nolan (D-Portland). Rep. Nolan is the Oregon House Majority Leader.

When it comes to balancing Oregon’s $15 billion general fund budget, here’s where House Democrats agree with the state’s most active business groups:

  1. Oregon’s economy has been hit hard by the national recession. Our first priority is to protect jobs, innovation and the educated workforce and stable system of civil laws that help businesses thrive.
  2. Maintaining quality schools, consistent courts, affordable healthcare, an efficient transportation system, responsive police and dependable fire protection is a key part of restoring a strong economy and maintaining strong communities.
  3. In balancing the state’s budget, the legislature should use all of the following tools, including:
    • tightening our belts and making taxpayer dollars go further by improving efficiency, accountability and transparency;
    • investing federal stimulus funds to preserve or create jobs here in Oregon;
    • using about half of Oregon’s Rainy Day Fund and Education Stability Fund to pay for vital services like classroom instruction, independent living for seniors and police officers to ensure safe communities.
  4. Finally, House Democrats and Oregon business groups agree that these steps are not enough, and a modest increase in revenue is necessary to protect Oregon families and businesses from further distress.

This is where our approach to taxes, and ultimately the plans we brought forward, differ: Both the Oregon Business Association and Associated Oregon Industries have proposed revenue plans of their own that raise more in taxes than the plan the legislature passed today. And the plans brought forward, one by OBA and one from AOI, would significantly increase the tax burden on small businesses and middle-class Oregonians. Our plan does not.

Below are some significant areas of difference between the plan we passed today and the plans offered up by OBA and AOI.

Legislative ProposalBusiness Group Proposals
Impact on Small BusinessesLower minimum tax on small business ($150)Higher minimum tax on small business ($250)
Smaller increments on minimum tax for small-to-midsized businessesBigger steps on minimum tax for small-to-midsized businesses
Does not raise taxes on businesses with profits below $250,000Increases tax rate on ALL business profits
Long-term ReliabilityUpdate of alternative corporate minimum tax is permanentUpdate of alternative corporate minimum tax is permanent
Permanently establishes 1% additional marginal tax rate on net profits over $10 millionAll rate changes expire within 4 years
Balance between individual and corporate taxesBegins to restore balance by modestly adjusting high-end rate on net profitsPerpetuates disproportionate tax burden on individuals
ProgressivityMakes changes permanent to make tax system more progressive and more fairProposes across-the-board increases on businesses and individuals, making tax system less progressive and less fair

So here’s why House Speaker Dave Hunt and I, along with Revenue Committee Chair Phil Barnhart, led the House Democrats to pass HB 3405 and HB 2649.

Our proposal is more finely tuned, and while it does not raise as much in the next budget period as the business plans, it offers an equitable, long-term way to protect schools, health care, police, firefighters, courts and prisons – without placing additional financial burdens on middle-class families and small businesses.

Under the legislative proposal, and ONLY the legislative proposal, the bulk of new revenue is paid by wealthy individuals and big corporations. Middle-class earners will see NO increase in their taxes.

Simply put, the biggest difference between the revenue plans being offered in Salem is that the legislative proposal makes Oregon’s tax system more fair. Our plan is about fairness. Fairness to Oregon families. Fairness to Oregon small businesses.

Fairness should not be a temporary goal.

Comments

  • LT (unverified)
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    Great communication strategy! Some of the Republicans seem allergic to discussing detailed data--it is all about rhetoric and ideology.

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    Thank you. This is a good start; glad to see you all didn't let the perfect become the enemy of the good (though a sale tax would have been....well...)

    Conservatives will howl, as they do, but only because they forget what the actual tax rates were back in their misty-eyed golden era of the 1950s.

  • Scott J (unverified)
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    where is the section on reducing costs?

    Most of us not working in or contracting with the Gov't have actually had to cut our costs as there have been no wage increases or we are without work.

    How exactly are gov't expenses being cut? I only see terms such as "efficiency", "tranparency" & "accountability". Where is "cost reductions" or rollback of spending to meet revenue projections?

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    Nice job Mary, and a good explanation of the situation.

    I do have to note that it would have been nice if a small business group had been there proposing a tier structure that met your revenue goals while spreading the burden in a more equitable manner.

    It seems that it would have been useful to have the representative of such a group to testify before Rep. Barnhardt's committee........Thus providing a different perspective on businesses that recognize that we are all in this together.

    Oh, well, maybe such a group will show up some time in the future........

  • Kurt Chapman (unverified)
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    Thanks for communicating the different approaches. We appreciate that Oregon business leaders also see the need for change. That reasonable people can disagree is a good thing.

    Personally I would have applauded the lege rescinding Gov K's needless across the board raises given to state directors and managers last fall. That is going to cost almost $300MM extra in this budget cycle.

  • Mike (one of the many) (unverified)
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    There are a few facts missing from this explanation of the new funding measures.

    On the front page of the May 19, 2009 Oregonian, there is an article about the proposed budget, and how it will be cut to meet the expected revenue shortfall.

    One thing stood out to me:

    . Total 2007-2009 spending is listed as $14.4 billion.

    . The 2009-2011 revised budget plan calls for $15.2 billion in spending, a 5.3% increase over 2007-2009.

    Further in the article, it is claimed that $17.2 billion is actually needed to continue providing state services at the current level; a $2.8 billion or 19.4% increase over 2007-2009 spending just to maintain current services.

    Can anyone explain how state spending needs would increase by almost 20% to maintain current services? I have looked at the resources the State of Oregon has on the web, and I could not find an easy explanation to this simple question. Is this recession costing Oregon 20% more? Has any Oregonian seen their income or total expenses increase 20% over the same period?

    Can anyone explain why an increase in spending from $14.4 to $15.2 is viewed as a "cut"?

    In many of the comments here on BO that are critical of taxpayers and small business owners complaining about higher taxes, there is always the mantra of paying one's "fair share". I don't think anyone is opposed to paying a fair share, and for that matter doesn't want to limit funding of education or social services that help the least fortunate in our state.

    What there will always be is a backlash from taxpayers who have no tolerance for waste and worse, the misleading arguments to support spending or tax increases. Why are school funding, public safety, and health care for the poor always trotted out as the recipients of funding cuts, when the actual budget figures show that many of these entities will actually be receiving more funding?

    People lash out at tax increases because sometimes the waste is too visible. Sometimes the shenanigans of a few tarnish the good efforts of the many who do spend frugally.

    Will I be affected by the new taxes? No.

    Am I frustrated that there will simply be a continuation of wasteful spending? Yes.

    Will this tax increase be temporary? No way!

  • (Show?)

    Mary Nolan is so right about so many things that I'm beginning to think I must be as crass and selfish as she and Mitch Greenlick said I was during the primary - if she's right about everything else, maybe she's right about me. Kudos to Mitch for the health reform bill, by the way.

  • Ms Mel Harmon (unverified)
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    Mary,

    As I mentioned to you recently at a local meet-and-greet, one difference with our current legislature is the amount of communication we as citizens are getting from our individual reps and senators and from Salem as a whole.

    Thank you for posting here and clarifying the differences in the plans. Please continue to use Blue Oregon as a forum to let us know your take on what's happening in Salem.

  • Boats (unverified)
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    Is anyone going to answer Mike's questions?

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    Is anyone going to answer Mike's questions?

    I don't know boats. Should we even bother? Lemme give it a shot (for all of the good it'll do):

    When the price of health care goes up by 20-25% year after year and;

    The wingers trot out new unfunded intiatives to jail more and more people for longer and longer sentences and;

    They successfully argue that any money that the state has at the end of a budget cycle should not go to a Rainy Day Fund to demonstrate at least an entry level fiscal responsibility, but is instead "My" money which should be in "My" pocket;

    The population grows (as it tends to do) and;

    The upkeep of bridges, sewers, roads, and rail are neglected, while they protect large real estate interests from having to pay for the additional infrastructure burden imposed on the rest of us;

    And the price of "deregulated" energy for transportation and home heating goes up by massive amounts;

    And a bunch of selfish idiots deregulate business at the national level for 30 or 40 years allowing the financial sector and the housing sector and the insurance sector to invent ever more complex insruments to relieve us of our excess 401k money (I guess to "level the playing field") every 10 or 15 years;

    The State of Oregon might find itself in a situation where the temper tantrums of the Wingnuts must finally be met with logical and fiscally responsible policies.

    I guess that's what the voters thought when they booted your sorry butts out of the majority.

    Just a guess though.

  • Boats (unverified)
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    You're saying the people elected Obama to print money? That is the only fiscal policy he has demonstrated to date. Well that and nationalizing banks and automakers.

  • Jef Green, PR Director - Oregon Business Association (unverified)
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    I think a little context would be appropriate for this ongoing discussion. First, we appreciate the dedication of our elected officials in Salem and the difficult job they have of balancing the state budget during this current economic crisis.

    On February 11th, OBA asked Majority Leader Rep. Mary Nolan to attend our Board of Director’s meeting to discuss the pending budget crisis. Rep. Nolan provided our board members with a sobering projection of the state budget and the political debate facing Legislature. She asked for the business community’s participation in addressing the crisis.

    Inspired by Rep. Nolan’s thoughtful discussion and request for participation, the OBA Board formed our Economic Crisis Taskforce. The taskforce, made up of OBA business leaders, including chair Matt Chapman, worked with economists from EcoNorthwest to develop a comprehensive balanced budget. The budget included support for maximizing federal dollars and using reserves to protect vital state services and support for delaying implementation of Measure 57.

    It also included significant tax increases on Oregon businesses including: a permanent tiered increase in the corporate minimum and a temporary increase in the corporate excise tax. (Contrary to House Leaderships assertions, the OBA plan does protect small businesses. The $250 corporate minimum in our plan versus $150 is more a political red herring than an actual philosophical difference.)

    So let’s stop for a second and let all this sink in; Oregon businesses stepping up to address a budget crisis by increasing their own taxes. It is not unprecedented. Keep in mind it was this same progressive thinking that moved the business community to forfeit the corporate kicker in 2007 to create the state’s first ever Rainy Day fund without which our current predicament would be much worse.

    So what’s happened? Why is every business organization in the state, including OBA, opposed to the current tax increases passed by the House yesterday? I can only speak for OBA and that is to say that our organization was shocked and surprised to have our good faith proposal, dealing with a temporary crisis, jacked up and made permanent.

    In the interest of getting to a fair tax package that serves the state’s needs and protect Oregon businesses, we have agreed to contribute revenue beyond our initial proposal however our members will not accept a permanent increase in the tax rate under the guise of dealing with a short-term budget deficit.

    OBA supports comprehensive tax reform. What we don’t support is the permanent dialing up of the current system which will adversely affect Oregon businesses and make long-term reform more, not less difficult to achieve.

    It is on this issue that the House Leadership has hung the future of the state’s budget. For without the support of even the most progressive in the business community, any tax increase will most assuredly be referred to voters. We know from past experience where that path leads. There is a path forward on protecting our schools and vital public services at this time of crisis. It only happens if legislators go forward with a plan working with the business community, not in spite of it.

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    "...dealing with a temporary crisis."

    No. The crisis brought on by the economic meltdown has revealed (if they needed revealing) structural flaws and inequities in Oregon's tax system. We need to address both the immediate crisis and those structural inequities.

  • Ms Mel Harmon (unverified)
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    Jef,

    The current budget crisis not withstanding, Oregon Businesses haven't paid their fair share of taxes in years with the tax burden being shifted to individuals with very bad results for this state. I'm glad to see the legislature attempt to change this.

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    Seconding what Dan P. said. Right on target.

  • mp97303 (unverified)
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    Does anyone know what percentage of individual taxpayers pays no taxes in the state?

  • riverat (unverified)
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    <h2>I think rather than using the absolute amount of state spending it would be more interesting to see the inflation adjusted per capita spending when comparing with the past.</h2>
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