October 19th, 2012

Portland Mercury Endorsements

Highlights from the Portland Mercury’s ballot measure endorsements:

MEASURE 79 (REAL ESTATE TRANSFER TAX): NO

Some wealthy real estate types are spending big money hoping to scare the living crap out of you by raising the specter of something that’s already way illegal in (most of) Oregon: the dreaded real estate transfer tax. Say no to this craven, cynical measure—a completely unnecessary bid to amend the Oregon Constitution. Under current state law, only Salem has the power to impose a real estate tax—and only if 60 percent of legislators (unlikely) say yes. Cities and counties are banned. The real estate industry isn’t convinced that’s good enough. They worry people might want to, someday, maybe, change their minds. But would that even be a bad thing? Let’s look at the one place in Oregon where a local real estate tax has been grandfathered in since the 1970s: Washington County. Prosperous, jobs-filled Washington County. Maybe we need a measure demanding a real estate transfer tax instead.”

MEASURE 84 (REPEAL ESTATE TAX): NO

The backers of Measure 84, led by none other than initiative maestro Kevin Mannix, like to start off by framing this as a matter of economics. Getting rid of the estate tax for all Oregonians (stiffs who leave behind $1 million or less in regular assets, or farms worth up to $7.5 million, are already exempt) will draw all sorts of rich people to the state, they say. And all those rich people will pay out so much in income taxes that we’ll never miss the $120 million in annual revenue the current estate tax already provides. . .

But there’s a darker secret hiding in the fine print: Wealth transfers between relatives would also become tax-exempt—opening a gaping capital gains loophole. Let’s say someone’s been sitting on a pantsload of Apple stock since the late 1980s. Cashing it out, after years of appreciation, would mean forking over big bucks to the government. But if that stock were “gifted” to a relative, who then sold it? That relative would pay taxes only on the stock’s gains since the transfer—not the original amount of appreciation. Another “gift” could then see all that money sent back to the stock’s owner. The state revenue office says that loophole will add hundreds of millions more to the cost of this measure.

Rich people have it swell enough. They don’t need our help making it easier.”

MEASURE 85 (END CORPORATE KICKER): YES

One of the dumbest things Oregon voters ever did was constitutionally enshrine the incredibly flawed budget “kicker”—the provision that sends money back to voters and corporations whenever tax receipts exceed what’s essentially the state bean-counters’ best financial guesses. Measure 85 would do away with the part of the kicker that applies to corporations, requiring that any unexpected revenue be funneled not to big businesses (mostly based out of state) but to our K-12 education system. Because the kicker only “kicks” every few years, the idea is to give the schools a little something extra they can salt away to help blunt cutbacks in down years.

Opponents raise a couple of compelling points. They complain we should wait for Salem to somehow produce “comprehensive kicker reform.” They say the state’s rainy-day fund should get any surplus. And they also worry that legislators will play dirty pool, spending the kicker check on schools but then cutting an equal amount from education’s usual appropriation.

But here’s the reality: The education budget’s among the most scrutinized in Salem, which would make any end-run politically idiotic. The rainy-day fund is too hard to crack into in a polarized legislature. And then there’s the fact that we’ve already waited too long to come up with reasonable solutions for the budget crisis facing our schools. So thank the measure’s foes for their diligence, and say yes anyway.”

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