My View: Raise revenue to solve budget woes
"I'm tired of explaining to my daughter why there isn't more art and music available for her in school," said a mother to a group of lawmakers traveling across Oregon to get input from the public on how to deal with a $1.8 billion budget shortfall. She's not alone. I and many Oregonians yearn for the day the state provides all children with the quality education they deserve.
While we applaud the Portland Tribune editors (Feb. 16) in calling for specific ideas and decisive action from our elected leaders in tackling the shortfall, we disagree with their conclusion that cutting budgets is the place to start. Oregon faces a revenue problem, not a spending problem.
The current $1.8 billion revenue shortfall is the latest chapter in Oregon's decades-old tragedy of shortchanging schools and other vital services. We're still suffering from devastating property tax changes in the 1990s. And we're paying the price for lawmakers handing out corporate tax subsidies and loopholes like candy at Halloween.
The solution to Oregon's budget woes — and to the chronic underfunding of services — rests in raising revenue. Plain and simple. With that in mind, the Oregon Center for Public Policy has put together a list of common-sense ways the Oregon Legislature can raise revenue.
These revenue-raising proposals generally share something in common: they look to businesses (mainly corporations) or the wealthy for the additional revenue. The reasons for that are obvious. We're living in a time of extreme income inequality. We're also living in a time when corporate income and property tax contributions are at low levels. Indeed, Oregon has consistently ranked at or near the bottom, nationally, in terms of taxes paid by businesses as a share of the state economy.
Here are four of the bigger-ticket items from the list.
• Enact a corporate gross receipts tax of 2 percent. This proposal would raise about $4 billion and fix key concerns of Measure 97. It would apply to businesses with Oregon sales of over $100 million a year. The revenue it would raise would allow our state to make serious headway in upgrading schools and vital public services.
• Expand and create new taxes on the health care industry. A big part of the current budget deficit is due to the decline in federal funding for health care, as well as health care inflation. Because the health care industry has benefited greatly from reforms under the Affordable Care Act, it's right to look to it to help fill the budget gap. Our proposal would raise $530 million or more in revenue, thus covering a significant part of the budget hole.
• Eliminate itemized deductions. The minority of Oregon taxpayers who itemize their deductions shrink their tax bill by more than they would if they took the standard deduction. Most taxpayers do not itemize, and those who do tend to be higher up the income ladder. By repealing all itemized deductions and increasing the standard deduction, the state would raise roughly $436 million — while lowering taxes on middle- and lower-income Oregonians.
• Reform the Oregon mortgage interest deduction. In the midst of a statewide affordable housing crisis, Oregon's biggest housing program — the Oregon mortgage interest deduction — will spend over $1 billion in the upcoming budget period subsidizing homeownership, with a majority of the subsidy going to the most well-off Oregonians. Not only is this tax subsidy inequitable, it is ineffective in achieving its purported goal of promoting homeownership. Reforming the mortgage interest deduction by limiting the benefits going toward wealthier homeowners would make available over $100 million — maybe a lot more, depending on the final design — that lawmakers could invest in addressing the state's severe housing and homelessness crisis.
Common-sense options exist for raising revenue that will allow Oregon to protect and strengthen schools and key public services. Exercising those options ultimately comes to political will — and Oregonians demanding that lawmakers fix our revenue shortfall with revenue solutions.
Chuck Sheketoff is executive director of the Oregon Center for Public Policy. He can be reached at: ocpp.org