Tuesday, February 23, 2010
Is Doussard dreaming an impossible dream? Let’s think about it.
In the year 2000, I had the honor of working for a business-labor coalition that defeated a massive Bill Sizemore tax cut for high-income Oregonians that would have gutted the state budget. Although organized labor contributed the lion’s share of the money, the business contributions were significant, with Phil Knight personally putting $50,000 toward the effort, despite the fact that Sizemore’s measure would have given him a huge tax cut.
In 2010, much (though thankfully not all) of the business community engaged in a fierce battle with the advocates of Measures 66 and 67— including myself. Phil Knight personally contributed $150,000 toward the “no” effort.
Will it be impossible to put the 2000 coalition together again to pursue — for example — kicker reform? Some say yes. Specifically, I have heard that many in the business community feel so alienated by the 66/67 fight that they don’t see why they should join forces with their 66/67 opponents — legislators, labor unions, advocacy groups, etc. — on any issue anytime soon.
I really hope that is not the case. Maybe I’m not the best messenger, because I was an outspoken member of the “yes” side. However, I have some expertise in wound-healing; many of my allies in the 66/67 campaign were people and organizations who opposed me in the 2008 Senate primary, despite the fact that we had been friends and allies in the past. I spent months hating their guts, and I still think they cost me a Senate seat. I was willing to work with them again because: (a) I gradually came to understand that they had logical reasons for acting as they did, and that it wasn’t personal; (b) I realized that we still shared important values; and (c) I realized that it was, frankly, in my long-term personal interest to restore a working relationship. (They, of course, had no problem working with me again; it’s always easy for the victors to be magnanimous.)
I hope that many of the business leaders who opposed Measures 66 and 67 will go through the same process, and be ready, in not too many months, to work with their onetime allies but recent opponents. Here’s my argument for why the same factors should apply.
Why business leaders should be able to recognize that legislators had logical reasons for acting as they did, and that it wasn’t personal:
The Legislators faced both short-term and long-term budget problems. They had a huge hole in the 2009-11 budget. They were looking at an even bigger hole in the 2011-13 budget, after the Federal stimulus money ran out. In their view, public services overall have been underfunded since the passage of Measures 5 and 47 in 1990 and 1996 — which, between them, reduced the total amount of tax revenue in the state by about 16%, as a percentage of personal income. Finally, they had a 60% Democratic majority — enough to raise taxes — which they knew they might never have again, and they had little reason to believe that more than a couple Republicans, in any future session, would ever vote for a tax increase.
So the Legislators had strong reasons to raise some revenue, to do it now, and to make at least some of the increase permanent.
The Legislature also had limited political options. They knew that whatever they passed would go to the ballot, regardless of what the organized business community wanted; in 2004, a “consensus” temporary tax package with business support was referred to the ballot by the usual anti-tax extremists, and the same people made it clear they were ready to do the same in 2009. There knew that there are only a few ways to raise taxes: through the property tax, a sales tax, the personal income tax, the corporate profits tax, or through alternative methods of business taxation such as a gross receipts tax. The sales tax has been defeated nine times. Property taxes are always very unpopular, and changing our property tax structure requires a Constitutional amendment.
A broader-based personal income tax increase, such as some business groups were advocating, is exactly what the Legislature tried in 2003 and 2004 — and lost. The Legislature remembered that loss. They also remembered that the business community contributed very little to the 2003 and 2004 campaigns. (In an editorial after the 2003 campaign, the Oregonian noted and bewailed that fact.)
That was, in fact, part of the business lobbyists’ problem in Salem this time: based on the 2003 and 2004 experiences, the legislators had no reason to think that business organizations would be very useful as allies. So they were much less concerned about alienating those organizations than they would have been if, for example, business had poured $5 million into the 2003 or 2004 campaign. They didn’t want to alienate any business organizations — but they weren’t obsessed with keeping them as allies, either. The glow of the 2000 anti-Sizemore coalition had worn off.
So the Legislature went with options the polls showed them would work: an income tax increase only on high-income Oregonians, an increase in the corporate profits tax, and alternative minimum tax. They knew that business groups wouldn’t be thrilled — but they did not expect violent opposition. On the personal tax side, most legislators don’t make anywhere near $250,000 a year; they couldn’t imagine that anyone would really be all that upset about a temporary rate increase of 2%, and a permanent increase of 1%, on income above that threshold. On the business side, they hoped that business leaders would realize that Oregon would still be 46th in the country in business taxes. As Ryan Deckert of the Oregon Business Association has pointed out, that’s largely because we don’t have a sales tax — in sales tax states, businesses pay taxes on the materials they buy — but it’s still a fact.
The Legislators’ attitude, I think, was something like this: “The business guys have said in the past they’d be OK with a sales tax, which would be a much bigger tax increase on business than this is. All this does is make us a little like Delaware, which makes up for the absence of a sales tax, in the business side, with a gross receipts tax and a high business profits tax. Delaware’s not considered anti-business, so we don’t think this makes us anti-business either.”
That was what happened. It really wasn’t personal.
Why business leaders should be able to recognize that they still share values with their erstwhile opponents:
Most of the state’s business leaders recognize that education is important. They know that an underfunded and unstable funded education system is not a good thing. And they recognize that the kicker is just plain silly. Measures 66 and 67 have not changed any of the underlying facts, and I would hope they have not changed anyone’s beliefs.
Why business leaders and organizations should recognize it’s in their self-interest to help on kicker reform:
There are two reasons, one more direct and simple than the other.
The simple, direct reason is this: If there is no kicker reform, then, in the next business cycle downturn, we still won’t have a rainy day fund. So what will legislators do? They’ll be strongly tempted to do the one thing that’s worked before — tax corporations and rich people. Voters don’t tend to abide by the logic of “we did this once before, we shouldn’t go too far”; they tend to keep on believing what they believe. The $10 corporate minimum tax was an especially good symbol, and that won’t be there in a future campaign, but “big corporations and rich people should pay their fair share” is likely to be effective in 2016, just as it was in 2010.
The more nuanced reason is this: Legislators will be less willing to alienate people who they see as valuable allies. In 2009, when they contemplated public finance issues and looked at the business organizations, they saw people who were in effect saying: “We think you should do the same thing you did in 2003 and 2004, even though you lost in 2003 and 2004 and we didn’t do much of anything to help you.” If, in 2016, legislators look at business groups as the people who nobly ponied up $4 million for the 2011 kicker reform campaign — despite the fact that they were still smarting from the 66/67 fight — they’ll look more kindly on them.
I know it’s hard to make peace with people who just beat you in a tough campaign. Believe me, I know. I had a very hard time sucking it up and campaigning for Jeff Merkley. It took me a while to be able to look at certain union leaders and legislators with anything but bitterness and rage. And the loss still hurts; I will never get another chance to be a United States Senator, and I think I would have been a good one.
But in the long run, we’re all better off if we heed the words of Satchel Paige. “Don’t look back; something might be gaining on you.” If business leaders look forward instead of back, I think they will recognize that it is in their own, and the state’s, long-term interest to wage that battle against Kicker Boy.
Steve Novick, a former federal Justice Department environmental lawyer, has spent the past 13 years rattling around in Oregon politics and public policy. In 2000 he worked for the broad-based business/labor/advocacy group coalition that defeated Measures 8, 91 and 93; in 2010 he worked for the Yes on 66 and 67 campaign.
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