Oregon Political Updates

Willamette Week:

In the wake of a recent letter from the governors of Oregon and Washington urging the project proceed despite a variety of concerns, David Osborn at the Stop the CRC Coalition has now produced this brief video. It should serve as a reminder that the Oregon Department of Transportation told both City of Portland and Metro officials the project would not move forward unless local concerns were addressed.

Click on Osborn's video below to watch it:

Discuss.

By Steve Packer of Newberg, Oregon. Steve describes himself as "a retired computer programmer and sports fishing enthusiast."

At a candidate forum for the Washington County Democrats, Tom Hughes, candidate for Metro Council President, asserted that Oregon’s revenue instability is not intrinsically the result of our income tax but rather a result the capital gains portion of our state tax. This is not new news but it is interesting that the idea is not part of the continuing debate for stability. Tom based his participation in the Governor’s taskforce on Comprehensive Revenue Restructuring (pdf).

The latest economic down turn has resulted in unemployment increasing from about 4% to more than 10%. However, even now some of us are doing very well. So, one would expect revenue short fall from income tax to be in the single digits and not the huge double digit short fall we faced in this period. Capital gains, on the other hand, are very sensitive to the economic environment and can approach zero in a down market (and carry-forward will affect subsequent up years). If we are to achieve stability, we probably should address the capital gains component of our tax.

Both residential and business real estate taxes have a like-kind transfer so the instability has to be with stock sales. During the dot com bubble, stock options, stock grants, employee purchase plans and general exuberance produced stock sales and capital gains. A lot of these employer programs have changed and the market instability is producing capital losses to balance gains. It’s a wonder there are any tax revenues from net capital gains.

Taxes on net capital gains have two purposes. One purpose is to spread a fair share of the tax burden to people who do not get the majority of their income from wages. The second purpose is to damp down speculation in the market. The latter is increasingly important with the creation of computerized trading.

The first purpose should have a tax rate that is as high as earned income. There is nothing to indicate that stock profits used to purchase the benefits of life are more or less valued than earned income. The latter purpose, however, should be low enough to encourage trading at human speeds and curtail computer speed trading.

Of course, we all should be saving for the future, including our retirement. And, a prudent policy is a diversified savings plan that includes stocks, most typically in a mutual fund. Even more important for me is the diversification of the ownership of American corporations. If we all own a piece, we can inhibit the accumulation of great economic power in a few hands. Controlling corporate ownership is probably an unreasonable goal. For our savings plans the capital gains tax doesn’t make much sense to me unless we take the money out to spend.

Stock trading does not have the benefit of like-kind transfers like one finds for real estate. They do have a penalty for like-kind transactions that yield paper losses but not for prudent changes for performance and security. With the enormous volume of stock transactions, keeping track of the basis is hard enough but would become impossible with some sort of comprehensive like-kind exemption.

In addition, humans are susceptible to a money illusion. We just cannot adjust for inflation. One of the critical skills for any business plan is the use of constant dollars for judging a projects value. Without some inflation proof metric, the results may look good but are no be better than just buying bonds. This illusion happens with stock and capital gains as well. Far too often we pay taxes on gains that just the result of inflation and we end up paying a penalty for choosing savings plans that hedge for inflation. Chile may have the ultimate solution with a metric that is based on cost of a bag of groceries. One might then pay taxes only on the change in the indexed value and not on the dollar value. Fat chance of that idea every succeeding!

For the capital gains tax rate, the Feds picked a random number between 0% and 100% of the income tax rate. They picked ~50% which is a fine random number but not very logical. I think Oregon should reconsider the capital gains tax rate to both reflect taxing real gains and to smooth out the revenue it generates. This smoothing would have us save some of the capital gains revenue during boom years and compensate for flagging revenue during the bursting bubble. The question then will be to ask if anyone believes there is another bubble in our future and a subsequent burst. Or, will we run with the herd into another dot com or housing bubble. My guess is you will all want a black tulip sometime in the future.

Update: 6:45pm: After initially deciding to discuss the issue with me on the record, the legislator involved with the threats has asked to have their information removed from the piece out of concern for their personal safety. I have redacted that information at their request.

A few days ago, State Representatives Val Hoyle and Nancy Nathanson along with State Senator Chris Edwards held a town hall meeting in West Eugene at Willamette High School cafeteria.

A Eugene contingent of teabaggers attended the town hall. One of them who posts on YouTube as "adb024" posted a heavily edited video on the event, with the usual right-wing pap to go along with it. The Eugene Weekly recently spoke with this guy as part of a story on the teabaggers. His real name is actually Aaron Baker.

By itself, the video is your regular boring, run-of-the-mill, righty-fringe conspiracy stuff. Nothing to write home about. But the comments left at YouTube attached to the video are another matter.

Here are a couple of screen shots which include the more egregiously ugly material (Click on the images to view an enlarged version):

It's my understanding that Baker should have the ability to delete this kind of ugly and nasty crap from the page. He's obviously reading it because he's responding to other comments. Apparently this kind of misogyny is just fine with Mr. Baker. Pretty cowardly stuff.

Val Hoyle believes the comments are mostly directed at her because she's willing to speak up at the town hall. Hoyle is fighting back in part with a Facebook page called, "Rain on their tea party: Support Val Hoyle". Hoyle quickly gathered over 100 fans this morning for the page.

Worse than that however, is what's been happening to another state legislator. The legislator has been receiving threatening letters. The letters are characterized as threatening "physical harm".

Both of these incidents are way over the line. These people are cowards and bullies.

So let's give them exactly the opposite of what they want. Reelecting Edwards, Hoyle and Nathanson will do just that.

Pitch some campaign money their way to help them out:

Rep. Val Hoyle

Senator Chris Edwards

Rep. Nancy Nathanson

By Alan Moore of Portland, Oregon. Alan describes himself as "an unemployed union organizer who spends his days applying for jobs, doing home remodeling and wondering if the right wing really does want to return to the middle ages."

On January 1, I joined over 220,000 (pdf) other Oregonians in the ranks of the unemployed. Despite sharing the anxiety about the future felt by all out of work Oregonians, my first few weeks after leaving my job were marked by bittersweet surprise as I discovered the public programs that help the unemployed. These programs are much improved from my last period of joblessness after my discharge from the Army in 1990. Despite the recent rhetoric by some politicians, the real effect of these programs is preventing the high unemployment rate from causing a mass wave of hunger, homelessness, bankruptcies and other tragedies that would surely otherwise face many more out of work Oregonians and their families.

Unfortunately, some of these programs are not well known and most are not well understood. That situation was highlighted earlier this month when Oregon’s two Senators found themselves battling to extend unemployment benefits for those that have been unemployed over 6 months (some 6.1 million nationwide). While the response of Sen. Jim Bunning (R-KY) to Senator Jeff Merkley’s pleas on behalf of extending benefits for Oregon’s unemployed isn’t printable here, his colleague Sen. Jon Kyl (R-AZ) was able to express the same sentiment without reliance on “salty” language – “continuing to pay people unemployment compensation is a disincentive for them to seek new work”. I think my experience is normal among Oregon’s 227,000 unemployed; I look for work daily. Before sitting down to write this piece, I applied for 3 jobs. Perhaps I should have simply reflected on how wonderful it is to have my income cut by 60% and had a beer instead?

So what are these wonderful programs that either shelter unemployed Oregonians and their families from economic tragedies or are disincentives to looking for work?

First and foremost are the state unemployment benefits that last up to 26 weeks and pay an average of $300/week (pdf) (the actual amount is based on each person’s prior earnings). The amount each Oregonian receives is supplemented by $25/week thanks to the much misunderstood federal stimulus package. Given unemployment rates remain so high, Congress and the Oregon Legislature have repeatedly extended the time that one can remain on unemployment and the U.S. Senate is currently considering extending these and other benefits through the rest of the year (in part to avoid more of the obstructionism that Oregon’s two Senators battled earlier this month).

As my former job had provided health care for my 3 stepchildren and my wife, maintaining my family’s health insurance was my number one concern when I lost my job. Thanks to action by both the Oregon legislature and federal Congress, I’ll be able to keep our health insurance at only 35% of the premium for up to fifteen months. Knowing we won’t lose our health insurance and join the 637,000 uninsured Oregonians (pdf) is a tremendous relief and will allow us to seek any needed medical care during my unemployment without incurring unaffordable health expenses or worse, without forgoing the care completely like many have to do.

Another pleasant surprise addressed one of my other high anxiety “problems”. Next year I’ll have 2 stepchildren in college and perhaps no job. Thanks to changes in the Higher Education Act in 1998, the university in Ohio my stepdaughter will attend is basing our financial aid on my projected 2010 income which is a fraction of what I earned in 2009. If I am still unemployed in July, the University of Oregon will utilize this flexibility as well to determine my oldest stepchild’s financial aid. Without this change, I would be writing about the tragedy of a future doctor and a future teacher having to give up their studies due to my joblessness.

There are many other programs that I haven’t personally taken advantage of yet. Job training, food stamps, mortgage assistance, job search assistance. The list could go on.

The smartly designed programs to help the unemployed are preventing my family becoming one of the unnoticed tragedies of this recession. These programs also help the entire state by keeping families participating in the Oregon economy. But that’s another story. For now I’m back to looking for work, because as good as these programs are, its better for my family that I find a job. That’s something that all Oregon’s unemployed understand and what some politicians in Washington seem like they never will understand.

It's easy to get overwhelmed when you try and study proposals for tax reform. All those "breaks and loopholes and deductions and exemptions and deferrals and exclusions", as the Washington Post's Ezra Klein puts it.

But Senator Ron Wyden's recent proposal - in collaboration with Senator Judd Gregg (R-NH) - is an important one. Here's how Ezra describes it:

The Wyden-Gregg plan takes the six income brackets currently on the books and compresses them into three (15 percent, 25 percent and 35 percent). It gets rid of the alternative minimum tax. It triples the standard deduction available to all taxpayers, which means that people don't need to spend as much time trying to itemize deductions and figuring out ways to game the system. It kills off the existing six corporate rates and eight corporate brackets, and replaces them with a flat corporate tax of 24 percent. And it reduces the task to a one-page form.

OK, sounds simple enough. But will taxes go up or go down?

Republicans and Democrats get into a lot of fights about how high taxes should be and what they should fund. But Wyden and Gregg have largely sidestepped those fights by holding revenue more or less steady and are simply attempting to clean up the code. ...

The result of all these changes? The average corporation and taxpayer would pay quite a bit less. But the system wouldn't be bringing in less money because fewer people would escape their burden altogether. That last bit is particularly important, says Bob McIntyre, director of Citizens for Tax Justice. "If you're getting rid of loopholes and lowering rates, you get winners and losers, not just losers. So all of a sudden it's not only one side that cares. That's especially true on the business side, which is where the real action is in tax reform and lobbying. That's the dynamic that makes tax reform possible."

In other words, the folks who've been hiring lobbyists to win themselves all those "breaks and loopholes and deductions and exemptions and deferrals and exclusions" would pay more -- while the rest of us would pay somewhat less.

And that's why Senator Wyden said that - from the perspective of a special-interest lobbyist - it's the end of the world.

Save for a couple of big-ticket tax items -- the mortgage interest deduction, for example -- the politics for most of the sections you'd want to clean from the tax code pit a tiny group of beneficiaries who are committed to preserving their sweetheart deals against the vast majority of Americans who have no idea that the tax code contains that deal in the first place. "Every interest group around will be lined up saying if you take our tax break, Western civilization will end," Wyden predicts.

Who else loses? Tax preparers and tax prep software companies. But then, isn't the existence of that entire industry simple proof that our system is too damn complicated?

As Ezra notes, we're long overdue:

Most experts think you've got to scrub the code every 10 or 15 years, much like ship owners have to dock the boat every so often and shear the barnacles from the hull. For a while, we were doing just that: We had major tax reform in 1954, 1969, 1976, 1986, and then . . . nothing. We've gone 25 years without a serious effort at tax reform. That's 25 years that corporations and interest groups and constituencies have spent complicating the tax code.

Sounds like it's time for tax reform to me.

I hereby apologize to Bill Bradbury and his fans for posts seeming dismissive of Bill and his proposal to raise $2 billion for schools. As to the $2 billion, I should not have dismissed Bill’s vague promise to get $2 billion out of tax expenditures with equally vague assertions of my own. In this post, I will go through the major items in the Tax Expenditure Report, and explain why I think Bill was being unrealistic. I think this exercise is important, not just for purposes of this primary, but because the “can’t we just cut some tax expenditures?” question is one I have been hearing from a variety of fellow progressives for years.

I should also stress that I am not dismissing the idea of $2 billion for schools per se. If Measures 5 and 47 had not passed in the 1990s, schools would, in fact, probably have at least $2 billion more per biennium than they do today. So unless we are satisfied with living in the world Don McIntire and Bill Sizemore have given us (to paraphrase a line I once heard David Sarasohn use), striving for $2 billion more for schools in a worthy goal.

Finally, I should have made it clear that although I do not think Bill has a realistic shot at the nomination, I have high regard for him as a person and a progressive leader. In fact, on one issue dear to my heart, he has been demonstrably better than my choice, John Kitzhaber. Bill was one of the few electeds who went down to Lottery Commission hearings with me to protest the ongoing giveaway of lottery dollars to taverns, in excessive commissions, at the expense of schools, economic development, and natural resource programs.  As to John as Governor – well, just to prove my goodwill to the Bradbury forces, here, free of charge, is the question I would ask John at the City Club debate if I were Bill:

“John, one of the greatest ongoing scandals in state government has been the excessive commission payments the Lottery has made to video poker taverns, at the expense of schools, economic development and natural resource programs – the intended beneficiaries of the Lottery.  While you were Governor, you retained and / or appointed Lottery commissioners who perpetuated this shameless giveaway. What do you say to advocates for education, parks, salmon restoration, and economic development about that aspect of your record?”

Based on conversations I have had with John, I think his answer will be something along the lines of: “You are right. I ignored that issue. I should have done something, appointed more responsible people. I am sorry. If elected, I will end the giveaway.”  But it wouldn’t hurt to get him on the record.   

Now, let’s turn to the $2 billion in tax expenditures. I have the 2007-2009 tax expenditure book here. I don’t have the most recent one, so the numbers will be slightly out of date, but the big items will still be the big items.  (I’m leaving the much-discussed BETC out of it.)

The single biggest ‘tax expenditure’ is the fact that we do not apply the property tax to intangible property – such as stocks and bonds. That ‘costs’ $11 billion. I kind of assumed that if Bill meant to extend the property tax to all forms of wealth, that would be a big deal and he would have mentioned it specifically. But if Bill in fact intends to do that, that would be a very interesting idea, and it would be progressive: Rich people own most of the stocks and bonds. Essentially, we’d be transforming the property tax into a broader-based ‘wealth tax.’

Now, I would not jump on that bandwagon without a lot of study. The tax experts who write the Tax Expenditure Report claim that “the experience of most states that impose taxes on intangible personal property is that the taxes are difficult to administer effectively and equitably … [and] are relatively easy to avoid.”  Also, although I like the idea of a wealth tax at the Federal level, there probably is SOME point at which, in a Federal system, we might start taxing the rich enough to drive them to other states; I don’t think the 0.9% Measure 66 income tax increase is going to do it, but maybe an $11 billion wealth tax would. I dunno. 

But if Bill has that idea, it’s a serious idea. I have not heard him express that idea. But if he’s for that, it would be bold and real.  Maybe too bold. But it would be real.

But when you get beyond the exemption of intangible assets … I’m going to give you a list of tax expenditures above $100 million in the book. I think they’re all pretty tough nuts to crack. I invite Bradbury supporters to tell us which ones Bill has said he’s willing to go after.  I realize he could talk about means-testing them, not eliminating them entirely – but if that’s what he has in mind, he should tell us.

Here you go:

Cafeteria plan benefits: $286 million

Employer paid medical benefits: $910 million

Medicare Part A benefits: $190 million

Medicare Part B benefits: $130 million

Pension contributions and earnings: $884 million

Capital gains on home sales: $352 million

Life insurance investment income: $216 million

Capital gains on inherited property: $807 million (another possible progressive target, but opponents would point out that Oregon already has a separate estate tax)

IRA contributions and earnings: $120 million

Medical and dental expenses: $275 million

Accelerated depreciation of equipment: $104 million (OK, that IS a business tax break)

Property taxes (the fact that you get to deduct them): $259 million

Home mortgage interest: $972 million

Social security benefits (Oregon exemption): $299 million

Federal pension income: $137 million

Federal income tax deduction (this is what the Legislature just phased out, for the rich, in Measure 66): $747 million

Personal exemption (which we all take on our income tax): $924 million

Inventory (the fact that we don’t apply the property tax to the business inventory): $434 million

Western private standing timber: $415 million. (This refers to the fact that we don’t apply the property tax to the value of standing timber. An argument for this exemption is that otherwise we would give timber companies an incentive to harvest ‘prematurely.’  I don’t know if that’s a good argument or not. If Bill plans to eliminate this exemption, I’m ready to hear his arguments.)

Motor vehicles and trailers: $748 million (this refers to the fact that we don’t apply the property tax to cars and trailers)

Personal property for personal use: $725 million (this refers to the fact that the property tax doesn’t apply to your clothes, furniture, appliances, etc.)

Strategic Investment Program: $128 million (this is the tax break for capital-intensive companies like Intel, not applying the property tax to all their capital investments, which I probably would have voted against when it was adopted but have gradually been convinced that it probably has helped generate and retain actual good jobs – Chuck would probably disagree with me and say Intel would be here anyway. But anyway, this is in fact a corporate tax break. If Bill is going to take it on specifically I would listen to his arguments)

Farm land: $183 million (assessing land used exclusively for farming at its farm value, not its potential ‘development value’)

That’s the over-$100 million list. Does that look like a target-rich environment to you?  The progressive way to go after those things would be to means-test the hell out of them. But can you imagine the hit pieces on any legislator who “voted to cut the home mortgage deduction, tax pension income, tax Social Security benefits, tax Medicate benefits, tax capital gains on home sales …”?  Sure, you could explain that you were just means-testing those things. But you’d be taking a hell of a risk.  (And I’m not sure at what level of income the means-testing would have to kick in to raise $2 billion.)

If Bill Bradbury is willing to take that risk, and is planning to ask legislators to take that risk with him, and is willing to say so, then I might not agree with him, but I would applaud his courage.  But so far, as far as I have seen, Bill has shied away from doing that. I think he’s said he would eliminate the mortgage interest deduction for second homes, which is good, but how much does it raise?  I haven’t seen an estimate recently.

As some of you know, I am absolutely obsessed with letting people know where our tax dollars go. I think we’d have much more rational political debates, and we would shift the entire political spectrum to the left, if more Oregonians were aware of the simple fact that most of their state and local tax dollars go to education, health care, and public safety. 

I think it’s also important that we know where the tax breaks go. The fact is that the vast majority of the tax expenditures AREN’T big fat corporate tax breaks garnered by sleazy lobbyists for their clients. I wish it were otherwise. I wish I could rail against the $2 billion in sleazy corporate tax breaks that we could eliminate tomorrow if the Legislature just had the guts. Life would be easier.

But I can’t. Because there AREN’T $2 billion in sleazy corporate tax breaks that we could eliminate tomorrow if the Legislature just had the guts.  If there were, the Legislature that was gutsy enough to pass Measures 66 and 67 would have already done the job.

I can’t cheer for Bradbury’s $2 billion plan, not because I don’t like Bill Bradbury, not because I don’t want to get $2 billion for schools, but because – to quote the slogan of the Oregon Center for Public Policy – facts matter. 

 

 

Well over 100 supporters of Lynn Howe, candidate for State Representative HD 6 poured through the doors to enjoy an evening of political comedy with none other than the very funny Carl Wolfson. Carl has been performing stand up comedy around the country for 31 years.

Carl met Lynn and her husband Jim at an AFL-CIO gathering in Sunriver a couple of years back where he entertained another large crowd. Lynn immediently knew if she ever had the opportunity she would call on Carl to bring his brand of humor to Medford. Those of us who are lucky enough to know Lynn know she has a knack for putting fun into fundraising. Carl generously donated his performance to Lynn's campaign.

Things got serious when Lynn reviewed her opponent's key votes in 2009-10 reminding the crowd that just two short years ago R-Sal Esquivel sat down with the Medford Mail Tribune Editorial Board declaring that the economy was stable. The newspaper endorsed Lynn Howe. The Medford Chamber of Commerce Executive board chose to not to endorse either candidate two years ago. Now Sal Esquivel has his lips securely attached to the Chamber's behind even reading from their newsletter on the House floor after 66/67 was affirmed by the voters in Oregon. Sal continues to insist businesses will flee the state as a result of the vote even while his record of voting no on job creating bills makes me wonder what kind of soup Sal is slurping. One example among many, he voted against establishing the Building Opportunities for Oregon Small Business Today (BOOST) account to provide loans and grants to Oregon small businesses creating new jobs for Oregonians (HB 3698). In 2009 he voted against construction projects at Southern Oregon University and Rogue Community college eliminating hundreds of potential construction jobs (SB 5505 & SB 5506).

Last night the crowd left Lynn Howe's fundraiser laughing with a smile on their faces. Carl Wolfson's abillity to weave meaningful and serious political commentary with humor made for a terrific evening of fun. John Kitzhaber and Bill Bradbury had better be prepared for the twinkle in Carl's eye when he moderates their debate on Monday.  I fully expect Carl to level the playing field with laughter,

In Friday's Oregonian, Eric Mortenson has a terrific profile of farmer Dave Vanasche, who is farming on foundation farmland that's been placed inside urban reserves for Washington County. You should click through if for no other reason than to view Randy Rasmussen's great photo work.

At ground zero in Cornelius, Dave Vanasche leads fight to preserve Washington County farmland:

But there's more to it than soil quality. The acreage north of Cornelius is a large, intact segment of farmland where little development intrudes. Lacing it is the infrastructure that makes farming go: tractor and combine dealerships, fertilizer and chemical stores, metal fabrication shops, and plants that clean and bag the grass seed and clover seed grown here.

Vanasche points out the pickup window to a freshly plowed field. The churned earth is dark and loose. "Not a rock in it," Vanasche says.

The field has been designated an "urban reserve" where adjacent Cornelius will eventually expand. Vanasche and other farmers with the Washington County Farm Bureau ceded it last month as part of a strategic retreat when the Portland region mapped land to develop and areas to reserve for farming and forests.

Some land would be lost to growth, the farm bureau acknowledged, so that larger sections north of Cornelius could be saved.

Vanasche guides the pickup north again. At 61, he's a ruddy figure in ball cap and work boots. He and his wife, Ellen, have a son, Mark, 23, and daughter, Kari, 26. He grows grass seed, clover seed and wheat on 2,345 acres. He owns 632 acres and leases the rest from two dozen property owners. Even those who disagree with his land-use politics call him an excellent farmer.

His parents, Florence and Albert, raised milk cows, beef cattle and the alfalfa to feed them, but told their sons to get an education and do something else. It didn't quite hold. The younger son, Tom, became an emergency room doctor but grows hazelnuts on the side. Dave Vanasche became a civil engineer and licensed land surveyor. He worked for the city of Hillsboro and developed a love for planning, but in 1980 he bought out his father to farm full-time.

His mother's parents, the Wunderlichs, founded the farm on Susbauer Lane where Vanasche grew up and has his shop today. His father's parents farmed a mile away.

Many farms in Washington County have similar roots, deep and old, with place names and family names that ring of northern Europe. Helvetia, Schefflin and Verboort. Duyck, VanDyke and Spiesschaert. Vanderzanden and, of course, Vanasche, which is Belgian.

Vanasche steers the pickup over a stream on the north edge of Cornelius. It flows west to east, a trickle through brush.

"This is Council Creek," he says. "This is where the battle starts."

Discuss.