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Olympia lawmakers eye Oregon for tax lessons

As Oregon voters this week vote on two tax-hike measures, the Washington legislature watches for signs indicating whether tax increases could fly in their state.
Oregon State Capitol

Oregon State Capitol Wikipedia

Washington Gov. Chris Gregoire

Washington Gov. Chris Gregoire CTED

Last summer the legislatures of Oregon and Washington took very different tacks while attempting to balance recession-wracked budgets. The Oregon legislature passed two major tax bills to raise about $727 million; the Washington legislature rejected tax increases in hopes of finding other ways to avoid a 2010 meltdown.

As I mentioned in a June 15 posting in this space, Democrats — who control both legislatures — took opposite paths, and both rolled the dice with the voters. With ballot results due on Tuesday (Jan. 26) in Oregon, legislators in Olympia will be watching results in hopes of picking up pointers.

Oregon's strategy appears to be winning. A poll released Tuesday by respected Portland pollster Tim Hibbitts shows both of the measures passing with votes to spare. Hibbitts is typically cautious, warning that tax votes are always volatile, but an income tax on high-earners has a 49-38 percent margin of approval and a corporate tax hike has an identical margin.

Hibbitt's margin of error is plus or minus 4.4 percent, meaning the results could be off by that much in either direction. Both results are well outside the margin of error. To add to the impact, 45 percent of the voters Hibbitts surveyed had already mailed their ballots when the survey was conducted Jan. 14-15.

As if to reinforce his caution, a follow-up Hibbitts poll released Friday showed the gap was narrowing, as final ballots are mailed. The Friday poll showed Measure 66 at 50 percent favoring a higher income tax and 44 percent in opposition — outside the margin of error. But Measure 67, an increased corporate tax, was favored in a 48-45 split, inside the margin of error, making it too close to call.

However, The Oregonian’s Jeff Mapes also reports a poll by Eugene pollster Rick Lindholm, showing the two measures are favored 50-39 percent and 51-40 percent, respectively. I don’t know Lindholm’s work, but I have always had confidence in Hibbitts, so at least the corporate tax may depend on turnout, particularly in Portland’s Democratic neighborhoods.

Oregon's Democratic leadership had hoped to avoid this month's election, but business interests conducted a referendum and placed the measures on the ballot. At least one early poll, in December, showed support for both measures leading, but well below 50 percent. It appears that undecided voters, at about 25 percent, swung heavily to the tax measures. That is unusual: Support for tax votes in Oregon normally declines as the election approaches, and most have been defeated.

Could Washington legislators have taken a similar path in 2009 and, more critically, will they opt to do so this year? That is the huge question for Olympia. In May 2009, Democrats adjourned with much breast-beating about how they had avoided Republican charges of "tax and spend" with a variety of one-time money and budget cuts. "All of us were miserable together when we made the very difficult choices for the people of the state of Washington," Gov. Gregoire said as she signed the budget.

Now it appears that the Oregon legislature can avoid a special session to deal with the defeat of its tax measures and spend the next several months praying for rain. In Olympia, a $2.6 billion gap in the state budget forces Democrats to consider at least some tax increases and grapple with Initiative 960's requirement for a two-thirds vote to pass a tax bill without sending it to the voters. Oregon has a 60 percent requirement, which the Democrats were able to reach in 2009. But voters had the final say in any event, via the referendum.

Looking at what appears to be happening in Oregon, what possible lessons could there be for Washington legislators? First, a caveat is necessary. Oregon is weirdly counter-cyclical in terms of its politics. When I first began covering Oregon politics, Barry Goldwater had just driven the Republican wagon into the ditch in his 1964 presidential campaign and Democrats were resurgent everywhere. Except in Oregon, where Republicans overturned Democratic control of the Legislature and began nearly a decade running the Oregon House.


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Comments:

Posted Mon, Jan 25, 3:54 p.m. Inappropriate

How we handle our revenue problem will have huge effects on higher education. In fact, the Bus family just got hit hard in that department: our Intern Coordinator, Sonny, might lose his scholarship for a year (http://washingtonbus.wordpress.com/2010/01/25/sonny-nguyen-and-olympia-in-a-can/). That's why we're doing an event called Olympia in a Can at the Grey Gallery (in Seattle) on Wednesday from 6-8. Attendees can give their video testimony about higher education so that legislators really get the higher ed issue (http://www.facebook.com/#/event.php?eid=208535326854&index;=1).

Posted Mon, Jan 25, 5:53 p.m. Inappropriate

Citizens should be willing to tax themselves to pay for the services provided by the state. Being willing to tax someone else for those services (airplane owners, cigar smokers, people who have exceptional incomes) has a less wholesome aspect. If Oregon needs the income why not raise the taxes on everyone by some lesser proportion? are they trying to discourage high incomes? do they want their high earners to establish residence in Washington? or Alaska? I think you implicitly grant too much high-mindedness to politicians who can find a small cohort to tax.

kieth

Posted Tue, Jan 26, 7:01 a.m. Inappropriate

Two things are important here: 1) 49 percent in a Yes/No election is not "passing with votes to spare" - it is failing.

Secondly, the Oregon Legislature took the "schoolyard bully" route by enacting these job killing taxes. Remember how it was when the bullies would gang up on the kids who had lunch money and "borrow" it? Today, in Oregon, the bullies are finally going to get what's coming to them - a good, hard punch in the snout. It's the only proven way to get them out of the trough.

mattevans

Posted Tue, Jan 26, 8:19 a.m. Inappropriate

I always laugh when I hear the word regressive used to describe sales taxes. The working poor pay so much more in Oregon income taxes than they ever would in Washington sales taxes, it is an absolute CRIME! Only upper income earners benefit from no sales tax because they actually have money to spend, and no state taxes food.

stefanie

Posted Wed, Jan 27, 10:26 a.m. Inappropriate

I think the Oregonians have a great idea! Washington State is home to some of the wealthiest people in the world, and one of the reasons they have homes here is to escape the progressive income taxes in other states. I say DEFINITELY tax those making over $150,000 annually to bring in more revenue. The U.S. is living with the greatest income inequality since the years just before the Great Depression. 1% of the nation controls 70% of per capita income. Asking those with the most to shoulder more taxes just makes sense.

Lorie

Posted Fri, Jan 29, 10:28 a.m. Inappropriate

So, if those people are here because of no income tax, adding an income tax will be an incentive for them to leave, won't it? What a great way to turn the economy around - punish success. After we've driven all the business men and women out of this state, I suppose we can all go work for the government. Who needs business?

dbreneman

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