Free money! Easy money! These words are like opioids to the brain, absorbed through the ear of all who hear.
Measure 118, heading to the Oregon ballot in November, promises everyone living in Oregon a guaranteed income of about $750 simply for breathing the fresh, clean air of our state. It proposes to tax large businesses a princely sum of $7 billion a year and then redistribute it to the masses. Robin Hood riding in to take from the bad and give to the good. What’s not to like about that?
Funded almost entirely by California interests, Measure 118 — known as the “Oregon Rebate” — is touted as helping the poor and other low-income Oregonians. Certainly a noble objective, and one the state has been pouring hundreds of millions of dollars into through affordable housing measures, expansion of health care and childcare benefits and expanded educational opportunities.
Unfortunately, for those of us living here in Nottingham, the savior Robin Hood has missed his mark.
Proponents say the measure will help reduce poverty in Oregon. But what is touted as progressive legislation is more accurately defined as “progressively regressive.” Under the measure, everyone living in Oregon, old or young, rich or poor, will all receive that tantalizing $750 check. The genuinely struggling resident gets a hand up. But so does your deadbeat couch-potato cousin, who spends their day on their parents’ sofa with a TV remote in one hand and a brewskie in the other.
State benefits, if truly progressive, decline as income rises, phasing out to zero at a defined income level. Not Measure 118. Consider that there are an estimated 20,000 homeless individuals living in Oregon. In contrast, research shows that there are more than 108,000 millionaires residing in the state. Under Measure 118, all will receive the same check. I imagine all those millionaires are just salivating waiting for their few hundred bucks to arrive.
That’s about it for the good news. Buckle up for what is next.
Because of the way this new business tax interacts with other tax provisions, the state general fund budget — which predominately pays for schools and health care for low-income Oregonians — would get whacked. State revenue analysts say in the next biennium the loss comes close to a half-billion dollars. And that’s a conservative estimate. Schools are already in fiscal crisis and struggling to meet the needs of disadvantaged children. Oregon’s plan to expand health coverage to lower-income Oregonians would be in serious jeopardy.
But wait, there’s more.
The Legislative Revenue Office predicts in the next five years personal income will drop below previous estimates. Employment will also take a hit, thousands of jobs that would otherwise exist will disappear. It is reasonable to project that most of those jobs will likely hit those same struggling, low-income families. And, if inflation is not already taxing low-income households enough, the revenue office says prices will be even higher than previous estimates due to Measure 118.
Take the grocery industry as an example. Measure 118 taxes sales, whether those sales produce a profit or a loss. National data estimates that grocery stores operate on razor-thin margins, between just 1% and 3% of sales. If a large Oregon grocery chain sold $10 billion of groceries in a year, and we took the average profit margin of 2%, that would result in a net profit of $200 million. Under Measure 118, the grocery would pay 3% of the entire sales figure of $10 billion, or $300 million in taxes, resulting in a loss of $100 million.
And that is on top of all the other taxes they already pay. It is not unreasonable to assume the grocer would have to increase prices by 5% or more across the board in order to net the $300 million owed in taxes. And what cohort of citizens spend a greater percentage of their household income on food than any other? The poor and low-income. There goes that 750 bucks in a heartbeat. How about prescription drugs or clothing. Even most sales taxes in the country exempt food and prescription drugs from taxation, but not Measure 118. In the end, the consumer always pays.
So how could the brilliant minds, carefully analyzing all the ramifications of this plan, miss all these glaring negative impacts? According to Willamette Week, the chief petitioner of the measure said: “This initiative was drafted at a coffee shop in Eugene.”
Truly, more needs to be done to address the very real human need of many of our citizens. Measure 118 is not the answer and creates more problems than it purports to solve. As one progressive friend of mine noted, “It’s a perfect candidate for the Nobel Prize in Unintended Consequences.”
Oregonians have been stung before by ballot measures that promise roses and deliver thorns. Measure 118 is just the latest that comes to mind. Yup, we’ve been down that road before.
Content provided by Rick Metsger, Pac/West Lobby Group