Vote No on Portland Arts Tax Measure 26-146

Chris Lowe

The heart of the problem is this: Measure 26-146 relies on an exceedingly regressive tax, bad because flat beginning at very low income, worsened by asking low income people to subsidize the pleasures of high income people, tying limited surcease for desperation over the school funding situation to accepting that subsidy. Its only saving grace is that the tax is relatively low.

Pretty much the whole of Portland establishment supports this measure, artfully dubbed Schools and Arts Together, and there is no organized opposition. So urging a vote against it probably is bootless.

Nonetheless it is a bad idea that deserves a no vote. The measure provides an inadequate fix for a real problem, by using a method that is wrong in principle, rather ugly when you look at it its implementation, that sets an insidious precedent.

The heart of the problem is this: Measure 26-146 relies on an exceedingly regressive tax, bad because flat, beginning at very low income, worsened by asking low income people to subsidize the pleasures of high income people, tying limited surcease for desperation over the school funding situation to accepting that subsidy. Its only saving grace is that the tax is relatively low.

Measure 26-146's public relations focus on a real issue, declining arts in Portland schools, across the several public school systems. But the funding the measure raises for schools is not enough to deal with the problem. In any case insufficient arts funding is part of a larger funding crisis that includes libraries, physical education and athletics, what used to be called "industrial arts," science infrastructure, and above all, short staffing leading to large class sizes and inadequate on-site support services for counseling, health, academic support, discipline and even lunches and recess. Segregating out the arts piece may only prolong the other problems.

However, the Schools and Arts Together measure devotes between a third and 45% (depending on whether you believe The Portland Mercury or Willamette Week both of which endorse the measure) to a fund to be administered by the Regional Arts and Culture Council pretty much at its discretion. Of that fund, 5% must be dedicated to "outside" arts that support the schools directly, but beyond that, it's a crapshoot. The money might mostly go to community-oriented projects that serve low income communities including schoolkids. But it could all go to the big, high-priced arts organizations like the Portland Art Museum, Portland Ballet Theatre, Portland Opera and the Portland Symphony, Oregon Children's Theatre (all of which I value) and so on.

As a result of this diversion of funds from the schools purpose on which promotion of the measure relies, the estimated $12 million to be raised will not even put an art teacher in every school. It will pay for one for every 500 students, and probably add 12 or 13 teachers, with many schools sharing teachers. Further, there is no requirement that the resources be directed to lower income schools without foundations first. It is just enough of a patch to probably make it harder to secure proper funding.

The deceptive advertising stressing the schools and hiding the Big Arts potential benefit is belied by the composition of the Executive Campaign Committee: heavy on business people, and arts administrators, with a sprinkling of famous musicians, and almost no educators.

The flat rate is $35 per year. Perhaps the rationalization went, "Well, that's less than $3 per month. Surely anybody who isn't destitute can afford $3 a month." But of course this tax won't be paid by the month, but in a lump sum once a year. For a family living a $1 above official poverty, and considerably higher than that, after rent and utilities and getting to work, and clothes for kids, and child care expenses, and maybe unavoidable student loans, or medicines, $35 may be a real headache come March or April. It could cut into the food budget for a month, or define the tipping point for filling a prescription or seeing a doctor. Not the end of the world, but a hassle in life filled with hassles, another addition to the litany of minor harassments as you move to the margins.

Comparisons to the price of espresso drinks may fly in OPB or other cultural fundraising aimed at the well off to reasonably comfortable, but they are irrelevant as we near the poverty line. The official poverty level is set well below the level of income that really defines a straitened, impoverished existence that makes life a struggle. Adding to that burden, or subjecting the poorest to a bureaucratic need to demonstrate their exemption from the tax, is wrong.

Something missing from Measure 26-146 is any clear commitment to equity in the distribution of its benefits. When the Oregon Historical Society secured Multnomah County tax funding to stabilize its budget a few years ago, it recognized the need for equity, so the OHS museum and library became free to all county residents in exchange. There is nothing remotely comparable in Measure 26-146. As mentioned before, the schools portion does not prioritize less arts resourced schools. On the cultural n.g.o. side, there is no requirement to provide access to lower income people who cannot afford the price of admission to high priced events and venues of organizations that cater mostly to the upper middle classes.

Meanwhile, even though the level of this particular tax is low in dollars, it sets a precedent for taxing on a broad base down to very low income levels with a regressive flat structure. Moreover, it is not a temporary tax, but a permanent one, building its deeply regressive structure permanently into Portland's revenue system.

As I have puzzled to understand how so many good, clearly well-intentioned people could have come together over several years behind such a regressive measure, there is a nagging suspicion that one piece of the answer might be a segment of the well-off with a Steve Forbes-ian flat tax agenda, who agree with Mitt Romney and Herman Cain that the rich are overburdened and the poor and lower middle classes aren't pulling their weight. Such people often have a keen appreciation of the arts, and form part of the clientele and financial base of the RACC associated organizations. Was a flat, broad, low-income tax the price of such support?

But I don't know that's true, and clearly many of the backers of Measure 26-146 don't remotely fit that profile. So one imagines rationalizations that $35 isn't that much, and long sessions debating whether something less broad, starting at a higher income level, with some progressivity, could be made to fly, asking what additional tax the middle-middle and upper-middle classes of the city would tolerate, permanently, concluding perhaps that as income has become more polarized, only taxing the lower middle classes right down to the niggardly Federal Poverty Level would work, that the trade-off of setting the floor higher would make the tax further up rise too steeply even with a completely flat tax. But I don't know that either, of course. The puzzle remains puzzling.

It doesn't make me feel good to write this. I'm an arts and culture person, by family heritage and current family practice, by extensive education, by long professional work, and by personal inclination. I belong to a number of the groups backing the measure and pay admissions I can't well afford to attend events at others, occasionally. I want arts in the schools. I want strong cultural organizations in my city and state. But this measure is the wrong way to secure those ends.

Since Reagan's success in demonizing the poor, it is also impolite in our culture generally and even, or perhaps especially, within Democratic Party-oriented politics to talk about fact that not all "middle class" (=above formal poverty) people are in the same situation. Nonetheless they are not. Some people live much closer to the edge than others.

In the words of the feminist working women's song, taken up the IWW a century ago, in Massachusetts and elsewhere, we should fight bread, but fight for roses too. Measure 26-146 twists that all around. Although I'm not sure it will get this bad, there is nothing formal to prevent it taking bread from those for whom it is hard indeed, to provide a few roses for those people's kids, but give nearly as much to already flower-bedecked grown-ups eating Napoleons and tortes.

However it came about, Measure 26-146 is a bad business. We should vote it down, reject its small scale but bad principle in principle, fight for a real solution to schools funding, and make the social and cultural commitment to the arts on a broader, more equitable basis.

Update: A reader kindly points out my error in saying that Willamette Week endorsed the measure; in fact that paper urges a No vote. Other readers point out that the term "flat tax" usually refers to a flat percentage rate of income, and that a fixed amount per person tax like Measure 26-146 represents a declining rate per income increment as income rises. This distinction is useful for seeing that this measure is not just regressive, but exceedlingly so.

Comments

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    Hi, Willamette Week recommends a No vote on this measure http://wweek.com/portland/article-19785-risky_business.html?current_page=5

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      Correct, this is not a flat tax (like the one espoused by Steve Forbes, etc). It's really closer to what we think of a head tax.

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      I doubt if the estimated $5 million to collect a percentage based tax would have been more palatable, when just $12 million is what is needed to solve the problem of nearly 12,000 Portland children without any arts education. (And a percentage based tax would have been levied on people below the Federal poverty line.)

      Without this $35, low income families - typically hit hardest by the lack of arts education for their children - will have to come up with much more than $35 in order to get music lessons and arts for their kids. No, the arts are at risk of becoming a privilege of the wealthier among us, rather than essential to our children's education.

      Where are the voices for them?

      And, I don't think I've every seen the Oregonian quoted so frequently on Blue Oregon! Personally, I think this piece on ArtsWatch is one of the most balanced I've seen on the topic, and the one that I think every person on this thread should take the time to read: http://www.orartswatch.org/regress-this-some-thoughts-about-the-arts-tax/

      We have the opportunity to solve a problem here. Nearly 12,000 of our kids - Portland's future - with no arts education. For $35. No tax is perfect. And the perfect should not be made an enemy of the good.

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    I think the problem with a regular income tax is admin cost. The iTax from a few years ago cost $5M a year to run. I would expect that cost to vary with the number of people subject to it so a city of Portland income tax might cost $4M.

    That's a lot of overhead for something intended to generate $12M in net funds.

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      This tax appears to carry a potentially very heavy administrative burden both for people below the poverty leve and the city to check, andl to demonstrate that they are exempt, and for the city to try to collect from people who may evade.

      This also seems to me primarily to be an argument for not trying to raise relatively little pots of money for different elements of the schools funding crisis but to deal with the whole.

      If the tax can't be administered affordably and be fair, but must be unfair to be affordable, it should not be passed.

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        Per the O admin for the $35 head tax is estimated at a little over $500K a year, with another $500K one time cost in year one. I'm not vouching for those numbers, just saying that's the claim. It should be cheap- it's as dumb as a tax can be and still pass constitutional muster.

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    It's actually dangerously close to a sales tax which for some reason seems to often escape the discussion of a regressive tax. Oregon has carefully danced around sales taxes for years, yet here we are with a wolf in sheep's clothing. Also, let's talk about how expensive the record keeping aspect of administering this program will be. I served on a citizens board that oversees ONE such fund and its distribution in Phoenix - the city had to employ eight full-time employees to manage this program. Eight.

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    By your description Mr. Novick, isn't this even worse than a flat tax then? Basically it's a flat tax with a hilariously low cap for the rich.

    (not taking a position one way or the other as of yet...)

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    Chris

    Thanks for posting.

    This proposal is a bad idea on so many fronts, and I'm deeply disappointed that so many progressives are supporting a patently unfair measure.

    Don't forget--more than half of the $12 million goes to a private entity to distribute with very little oversight.

    This whole deal really smells bad--the RACC went private 5 years ago (it used to be a city agency), it still gets nearly 90% of its funding from local governments, and not it wants its own dedicated revenue source.

    Very, very bad. Big yes on the school bond. But big no on this stinker.

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    If I were trying to raise money to support the arts, I'd put a 10% sales tax on for-profit event ticket sales -- rock concerts, Blazer games, movies. Non-profits like the Oregon Symphony or Northwest Film Center would be exempt.

    Ten percent added to a ticket is quite reasonable, and we already know people are willing to pay it -- after all, people routinely pay the 30% to 40% markup Ticketmaster gouges charges for its "services." It would be far better than the current proposal; among other things, a ticket tax would only hit those who could afford it: the people with enough discretionary income to see movies in the theater, Rose Garden concerts, and professional sports.

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      Definitely a kind of idea worth noodling around with to develop.

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      I'm not even sure that you'd have to do 10% on ticket sales. I think you could probably just do 10% on the ticketmaster fees and make plenty of money for the arts.

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      We've run the numbers on that, and I assure you, it's not feasible. If you think it's expensive to collect the income tax as proposed, you would be mortified to see how much it costs to collect a percentage of sales on certain businesses. It would be easier if we had a state sales tax reporting and accounting system, but we do not, so one would have to be created. And can you imagine the lobby against a sales tax levied on only certain kinds of businesses? I'm afraid this idea is a nonstarter.

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        You mean like the massive lobbying efforts against Portland imposing a sales tax only on hotel rooms? Or only on rental cars? They didn't actually prevent the City from imposing either tax.

        Seattle imposes a 5% admissions tax on entertainment and recreation events. Apparently, they figured out how to make it feasible. So I'd look at what they did. And maybe see how they got around whatever lobby was raised against a sales tax only against a certain type of business.

        Maybe there are "mortifyingly" high costs to collect this type of tax, but obviously "mortifying" costs are not actually prohibitive. Otherwise, taxes on hotel rooms or rental cars or event tickets wouldn't exist, either here or in Seattle.

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          Again, Washington has a sales tax mechanism in place, so it is very easy for Seattle to count and collect a 5% tax on those industries. We don't have such a system in Oregon, and though I am a huge advocate for implementing a sales tax, it would be disproportionately expensive to set up such a system only for a relatively small collection ($12 million/year).

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            Not to keep beating a dead horse here, but the Seattle admissions tax appears to be collected completely independently of sales tax ... at least, that's how I read the city's web site on the subject (http://www.seattle.gov/rca/taxes/ADMITAX/payment.htm). I see no reason that Seattle's system (which they've been refining since 1943) couldn't be adopted here.

            And again, even though Oregon has no sales tax, that hasn't prevented Portland from imposing sales taxes on hotel rooms and rental cars. How are ticket sales so vastly different?

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    I would like to remind you that those "high priced" arts organizations serve citizens across every socioeconomic group. They all have flexible ticket prices (including $5 tickets for Oregon Trail Card holders), free civic events like symphony in the park and free days at the art museum... the list goes on. For a slightly less pious, somewhat more sophisticated look at this proposal, I encourage you to read http://www.orartswatch.org/regress-this-some-thoughts-about-the-arts-tax/.

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    Jeff

    A reduced entry day once a week or low priced tickets doesn't mean that an organization serves "every socioeconomic group." Your own attendance data cited in the linked article shows a highly skewed attendance pattern.

    I read your "sophisticated look" and it's filled with inaccuracies.

    First, the author claims that a property tax based on valuation is just as regressive as a flat tax. Absurd! Unless you believe there is no correlation between property value and income.

    Second, it is wrong to suggest that arts have been eliminated from all schools. Wealthier schools pay for arts education though PTA fundraising.
    How does this head tax "equalize" the playing field? By allocating money using a flat formula based on school population. Therefore, wealthy schools which already have arts education now get it paid for by a regressive head tax.

    Third, I don't doubt studies that show that arts are a valuable part of the educational program. The problem is, compared to what? Compared to no physical education (which has also been cut at many schools) and obesity? Compared to classrooms with 40+ students and lagging graduation rates?

    The problem with this proposal is it prioritizes just one part of the educational program--laudable though it may be--over others, and creates a dedicated revenue stream just for it.

    Fourth, I don't doubt the sincerity of arts organizations. But many organizations in the city are sincere, dedicated, and have low endowments. They all have priorities. But the one backed by wealthy arts patrons seems to make it onto the ballot.

    I would be thrilled to have a full and enriching educational program in PPS. But I have to say, you are a little late to the party. The arts were eliminated a decade ago. Middle school music and athletics were also cut. Kindergarten sizes are over 25.

    There are ALL priorities. And they should all be weighed and balanced against one another by the school board, individual school principals, and PTAs.

    Man the barricades for more school funding. I'm there with you. Raise money for a private non-profit via a regressive city-wide head tax? No thanks.

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    This is a good debate; thank you for reading my link. But if you're going to keep calling this a head tax, then I am dubious about the rest of your argument. A judge has clarified this already: "The proposed tax at issue here is not a head tax or a poll tax because it is not assessed per capita—it is assessed only upon income-earning individuals age 18 or older in households above the federal poverty guidelines." Just because a tax is flat does not make it a head tax.

    Also, I would like to point out that Street Roots -- perhaps the strongest voice for lower income and marginalized people in our community -- has endorsed the measure. They point out that “for children and the poor, art is either nonexistent or out of financial and social reach. The benefits of arts training – on math skills, cognitive processing and simply our joie de vie – are well documented. For $35 per person, we can fund not only public school programs but also programs generating community involvement among people who are social and economically marginalized.”

    We both agree that the proposal prioritizes one part of the educational program, and creates a dedicated revenue stream for it. Research shows that Portlanders are sick and tired of having their arts education programs cut, and our children are worse off because of it. That's why this proposal resonates with parents and so many other education advocates. You suggest that the priorities should be weighed and balanced against one another by the school board, individual school principals, and PTAs. I suggest that the time has come for the priorities to be weighed by the voters.

    We all know that education and tax reform are badly needed. I don't see that happening anytime soon, so I strongly support the notion of a small income tax to fix this problem today.

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      Regarding this from your link, from the Creative Advocacy Network's executive director:

      "Levying a rate-based income tax would have cost about $5M annually to collect (no matter how low the rate), and as we were aiming for $12M in net revenue, we determined that that was unacceptably high. Capping the income tax helped the cost of collections some but we were not able to get that cost down to 5% until we made it just two levels: $35 and $0."

      The cost control comes from two levels, not from the $35 figure or the poverty level cutoff.

      If the cutoff were median family income in Portland, I would be more willing to entertain the logic above. I still wouldn't be happy about the regressivity, but the distributional arguments at the link about public schools as equality encouraging institutions would have more weight. Even more if there were stronger mechanisms for ensuring priority to lower-resourced schools. Even more if all the funding for non-schools elements were required to be devoted to expanding access to lower-income people.

      None of that is there. Portland has about a 14% poverty prevalence in 2010. Kids have higher levels of poverty than adults, so to be conservative call it 10% of the population excluded from the tax. To raise the cutoff level from poverty to median would reduce the number of payers by 4/9 and more or less double the tax on the rest. Call it $70 and add a few bucks to the total collected.

      Why didn't CAN go for a structure like that? Why tax very low income people?

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    Jeff, the tax is not a full-blown head tax because it excludes children, adults who don't earn incomes and those whose incomes fall below FPL. Fine. Above FPL it has most of the problems of a head tax, as Steve Novick points out.

    Specifically, it levies the highest tax rate on those with the lowest incomes, among those who are required to pay, and the lowest rate on the wealthiest payers. This is a wrong principle that should be opposed.

    Street Roots' constituency is compose mainly of people who will be exempt from the tax. Portland should make arts available to those people. I am highly skeptical that the high end arts organizations do a lot to encourage attendance at their events and venues by homeless folks.

    The effect of this tax on a person $1 below FPL and $1 above it will be very similar and potentially burdensome.

    This tax does not remotely fix the problem. It doesn't fully fund an art teacher in each school, and it appears likely that it will be the schools of lower-income families that will still be left in the cold.

    It appears that the high income major constituents of the expensive arts organizations, or enough of them, would not get behind a measure that was fair to low-income but above poverty working people, and that the "arts & culture community" was unwilling to fight for a fair tax base for this initiative.

    I'm a PPS parent with an arts oriented kid. I want stronger arts in PPS schools. But this isn't the way to get it.

    I'm someone who believes in the values of the arts for a decent society, a high quality of life and for their own sake. But this measure, rather than challenging the unfair distribution of arts in society, makes marginal extension to cash-starved schools and a few programs "for everyone" dependent on the poor-in-practice (near FPL) subsidizing the upper middle class and wealthy. It reinforces the privileges of the latter and reinforces arts inequality, rather than challenging it. It is just wrong.

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      I think most of what you say is fine. But you have no basis for suggesting that the schools of low-income families will still be left out in the cold if this measure passes. That's absolutely false. There will be 1 arts teacher for every 500 students in Portland, no ifs, ands or buts.

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        Some schools have arts teachers now. Those schools will get additional arts out of this, while schools with none that are under 500 will have to share teachers and will have less arts. Is that wrong?

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    I completely agree. I'm not only a PTSA board member who has worked hard to fund the arts in my kid's school, but a fierce advocate for school funding over-all, and I'm so appalled that we might think that this is an appropriate way to fund education. Are we going to vote on math funding next year? Then science?

    Let's fund what schools need, period, and leave poorly conceived taxes at the door.

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      I can understand and appreciate your position, and I look forward to seeing how the schools outside of Portland are going to fund everything they need, including arts education.

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    Vote yes friends.

    This is a small and common sense approach to the idea of helping stabilize the arts community that will ultimately help not only the schools, but government, foundations, private citizens, non-profits and others who right are responsible for holding up the arts community.

    By chipping in and passing this measure —— we are making an investment in both the arts and people experiencing poverty. The idea that this is a tax on the poor is a stretch.

    I personally believe that money raised, even for the larger organizations, will help free up dollars that can go to vital programs outside of the arts. We as a community are already paying for these programs, it's a different approach in allocating the dollars...

    Saying all that, have faith that groups like Street Roots and other poverty organizations will advocate that the poorest among us will not be unfairly targeted and that the larger organizations will do their part to support the small fish...

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