Measure 97 backers and foes dug in their heels during a Thursday debate at the Medford library.
The measure would generate nearly $3 billion annually by imposing a $30,000 minimum tax on C-corporations, plus a 2.5 percent gross receipts tax when their sales exceed $25 million. At present, Oregon's minimum tax on corporations is capped at $100,000.
Shamus Lynsky of the Oregon Consumer League and Phoenix resident Mark Kellenbeck, co-founder and co-chair of Main Street Alliance of Oregon, told a gathering of about 150 why the initiative should pass, while Portland Business Alliance CEO and President Sandra McDonough and Medford Fabrication President Bill Thorndike explained reasons for defeat. The debate was co-sponsored by the League of Women Voters Rogue Valley and the Mail Tribune.
In essence, Measure 97 proponents see passage as the way to fill the state's impending budget hole. Opponents point to increasing consumer costs and lost jobs. Both agree that the measure is flawed and the matter ultimately will kick back to the Legislature, which will have 25 to 30 percent more revenue to spend if it's approved by voters Nov. 8 or have to set an alternative course if it isn't.
Lynsky and Kellenbeck centered their opening arguments on fairness.
"In 2013 over 500 corporations paid zero in state taxes," Lynsky said. "Does that seem fair to you? Clearly we need a fix and Measure 97 is that fix."
McDonough pointed out that corporations hit by the taxes aren't merely faceless, national and multi-national grocery chains, utility and cable companies, but home-grown businesses such as Lithia Motors, Umpqua Dairy, Tillamook Creamery and Powell's Books.
"This is not a tax on corporate income or profits," she said. "The word sales appears seven times (in the ballot title and explanatory statement) ... the word profit does not appear even once."
Economists refer to the gross receipts tax as a consumption tax, but Lynsky argued Measure 97 is not a sales tax; it merely changes the tax for the top tier, he said.
"It's not a new sales tax and that's going to affect 1,000 of the 400,000 registered C-Corps in Oregon," he said. "These are large national companies that have national pricing strategies; they don't adjust their prices based on the state."
Referencing a former state economist's description of Measure 97 as a "sales tax on steroids," McDonough noted the tax levied at multiple points in the manufacturing process will affect prices. U.S. Agriculture Department, Labor Department and National Consumer League studies show differential pricing state-by-state and region-by-region. A 2013 Consumer League survey found price differences by state, county and neighborhood by neighborhood.
"The local business adjusts for the local costs," she said.
The measure speaks to three specific needs — education, health care and senior services — but the Legislature is not legally bound to designate funds in those areas.
"They have to vote on the budget, but guess what," Lynsky said. "The budget is made up of education, health care and senior services. There are some other services as well, but that's a huge chunk of the budget already."
The Oregon Healthy Authority is looking for a $1 billion increase in its budget, he said. "That's where this money is going to go."
Aside from a projected $250 million generated from fuel receipts that is constitutionally sworn to roads, McDonough said there is no guarantee where the money goes.
"The governor (Kate Brown) has put out a plan that has a lot of other things that she plans to do with this that is not education, health care or senior citizens. So once it gets there, you don't really know how the Legislature is going to spend the money."
When it comes to who is helped the most and hurt the most by passage, Kellenbeck said 7,000 teachers are needed to reduce class size, while impoverished seniors and those without health insurance will benefit.
Thorndike said high volume, low-margin firms whose margins run between 1.5 and 2 percent would see their profits wiped out.
"It shouldn't take them very long to figure out how to offset that additional cost with additional costs you and I would be paying," he said.
McDonough said her organization advocates for beneficial taxes, including those for low-income housing.
"If it's a package that makes sense, if it is a well-made plan that we know how the money will be spent, we're there," she said. "But this is a very flawed package, it's poorly done, it was done unilaterally without the input of any of the businesses that would be impacted."
Kellenbeck said that there is an expected $1.5 billion shortfall looming as the Legislature heads into the 2017 session. Passage would fund that deficit.
"I think we have no choice at the end of the day," Kellenbeck said. "Since this is a statute, I think there is wisdom in this to let the Legislature knock the kinks out of it. It will be one royal battle, we know, but at the end of the day I think we will have crafted the fine pieces that end up being a good piece of legislation... Like it or not we're going to have to trust our legislators to hammer out a good final solution. But absolutely, we need the revenue, we needed it 10 years ago, we needed it 20 years ago, we needed it 30 years ago; we're playing one big catch-up game."
McDonough said a better solution is to bring representatives of the competing interests together to develop a tax plan.
"You have lots of folks at the table and have give and take," she said. "You don't unilaterally put a plan on the table and say 'Take it or leave it, this is what it is,' which is what they have done."
Economic studies aside, Kellenbeck said, the question is much simpler than people think.
"What if prices go up?" he asked. "It could happen. Is that going to be reason enough not to pass this measure and to deal with the revenue income crisis we have? ... This is a very reasonable number, it's a very reasonable proposition. We have chance to grab our own destiny, I say we take it."
Thorndike related a conversation earlier this year with Ben Unger, a former state representative who now heads Our Oregon, the group that launched Measure 97.
"I said I don't think this is a good idea for us to go out and have to spend ... $20 (million) to $30 million having a discussion around this, just because we're the state of Oregon where we test out silly ideas," Thorndike said.
He described the distribution of tires to illustrate the costs of the receipts tax.
"Understand that this tax affects it each time it's touched," Thorndike said. "That is unlike any other sales tax that taxes the ultimate consumer."