Measure 97 to Increase Big-Company Taxes & Improve Social Structure with Revenue

oregon-investors-600x600Governor Kate Brown has approved a brand-new tax initiative for Oregon’s fall vote.

One of the most crucial – and controversial – bills on November’s ballot, Measure 97, was created to raise a minimum tax on large corporations. If passed, M97 will put a gross receipt tax of 2.5 percent on all corporations making over $25 million in sales per year in Oregon. Revenue from this specific tax, which Brown has estimated will amount to $3 billion a year, will be used to support public education, health care, and services for seniors in the state.

Proponents of M97 are confident the new tax will help solve social problems through increased spending. According to an analysis from the non-partisan Legislative Review Office, the new taxes implemented by M97 will raise approximately $6.1 billion in revenue for Oregon over a two-year period. The myriad advantages of that $3 billion a year, say supporters, could improve Oregon’s social structure in ways the state has needed for decades.

The high school graduation rate in Oregon, for instance, is the fourth lowest in the entire country, but fed-up teachers leading pro-M97 labor unions are confident that new money for schools will ensure more students begin graduating from K12, postsecondary, and even higher education. Students who attend trade school or community colleges will have the opportunity to become valuable employees for local businesses requiring workers educated in skilled trades.

Other benefits of M97, if passed, include better health insurance with assistance to those nearly 300,000 Oregonians who lack coverage. In addition, the Legislature promises that more revenue will lead to improved senior care – instead of retiring in poverty, Oregon seniors may be able to stay in their homes.

Opposition of the initiative is widespread, and opponents believe that imposing higher taxes will force companies to raise prices, resulting in consumers having to pay more for products and services. According to the LRO analysis, Oregonians earning between $21,000 and $48,000 a year will experience the greatest financial consequences of M97’s tax. Republican lawmakers and anti-97 lobbyists claim that higher prices will apply to even the most basic necessities like food and medicine. Opponents are also concerned that the tax may threaten employment: The LRO analysis found that M97 could cause a loss of 38,000 private-sector jobs between 2017 and 2022.

Other opponents claim that M97 would hurt Oregon businesses that can’t afford higher costs. However, the numbers from LRO’s analysis don’t support this concern. In fact, out of the over-400,000 businesses that operate in Oregon, less than a quarter of 1 percent of those making over $100 million or more per year in sales would bear about 85 percent of the new taxation. LRO found in their analysis that the majority of companies will be unaffected, with only about 1,051 companies paying more taxes.

Some groups aren’t sure whether the revenue will go to what they are designated on the ballot. The Oregon Business Association has called the tax revenue a “multibillion-dollar blank check” which the Legislature could use for whatever it chooses. The language of the initiative states that revenue will augment state spending on education, health care, and senior services, but the ballot doesn’t actually promise that the Legislature will follow this specific plan.

Several lawmakers have voiced the opinion that our governor should find another way to fix our state’s budget issues. And for Brown, creating M97 was not an easy decision. The governor has long supported creating a sales tax in Oregon, but knows that Oregonians would never go for it. The revenue created by the gross receipt tax was the principal reason Brown supported the initiative in the first place, and the governor said her hands were tied, stating in an August interview with OPB and Fox 12 News that “I felt like I had no other option available.”

Different economists and groups disagree on what the exact impact will be on consumers, Brown added. Voters will take to the polls to determine the fate of M97 in November. If passed, whether or not M97 solves Oregon’s social problems has yet to be seen.

By Kiki Genoa