The state already has a supermajority requirement to raise taxes. Businesses want to expand it to protect their tax breaks.
BY
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OCTOBER 29, 2018
The Oregon Statehouse
(Shutterstock)
For a full summary of November's most important ballot measures, click here.
Some two decades ago, Oregon joined more than a dozen states in passing a constitutional amendment that requires a legislative supermajority to approve tax hikes. Three years ago, the state Supreme Court and a subsequent legislative counsel opinion created what some say is a loophole. In November, voters could close it, making it harder for the state to raise revenue.
The 2015 ruling held that while proposals to increase taxes were still subject to the requirement, lawmakers could eliminate tax rebates and exemptions without the three-fifths majority. While that’s consistent with many of the 13 other states with a supermajority requirement for broad-based taxes, it’s led to concerns in Oregon that lawmakers will use the workaround as a way of plugging budget holes or increasing the budget.
But Measure 104 on the November ballot would expand the supermajority requirement to legislation that would increase state revenue through changes in tax exemptions, credits, deductions or fees. If passed, it would protect 367 exemptions, loopholes and tax breaks that collectively cost the state more than $12 billion a year.
Opponents say the proposal is designed to protect tax breaks for special interest groups. But supporters argue it's about fiscal discipline. “We think Oregonians want to keep [Gov.] Kate Brown and others' hands out of the cookie jar,” Paul Rainey, a spokesman for the Yes on 104 campaign, told the Willamette Week. “Right now, it's too easy to raise revenue without a three-fifths vote."
The proposal in Oregon is one of a slew of tax-limiting ballot measures across the country this year, from Florida, where voters will consider enacting their own supermajority requirement for tax hikes, to Arizona, where a proposal seeks to ban taxing services. Oregon voters are also considering a proposal that would freeze the state's corporate minimum tax and ban state and local taxes on groceries.
Real estate agents are the driving force behind Measure 104. They are especially worried lawmakers will get rid of the state’s tax exemption for home mortgage interest after an attempt to do so last year in the legislature failed.
Also fueling the ire is a move earlier this year by Democrats to decouple part of the state’s tax code from the federal tax code in an effort to avoid a massive state tax break for small businesses. Republican lawmakers have since sued the state over the move, arguing the bill should have complied with the supermajority provision in the state Constitution.
If Measure 104 passes, it would make any tax reform effort difficult, says David Brunori, a state and local tax law expert at the firm Quarles & Brady. “It is not surprising that powerful interest groups that receive exemptions and deductions are in favor of the measure," he says. "It is a rational reaction. But it will lock the state into its current tax system for a long time.”
Any fundamental tax reform usually requires broadening the base by repealing deductions and exemptions and lowering rates, he adds.
Among those joining the Oregon Association of Realtors in supporting the measure are the Automobile Dealers Association of Portland and the Oregon Restaurant and Lodging Association.
Their work may be cut out for them, though. A poll earlier this month found that just 28 percent of voters say they support the idea while 37 percent are opposed.
For a full summary of November's most important ballot measures, click here.