On June 10th, former Governor John Kitzhaber criticized Governor Kate Brown for not doing something to head off Initiative Petition 28, which is likely to be on the November ballot. The initiative would raise corporate taxes in Oregon which along with Connecticut are currently the lowest in the country, according to the Council on State Taxation.
We think Kitzhaber would have done better to keep his opinions to himself. And not because he and Cylvia Hayes are still under investigation for misconduct, though that would be a pretty good reason. It’s because he served three terms as Oregon’s governor, 12 years, and did nothing to halt the precipitous decline in corporate taxes. Time and again he promised that he would tackle what he called “tax reform,” but he never did. Instead he led the way in giving big tax breaks to some of Oregon’s largest corporations.
In 2012, he called the legislature into special session in order to give Nike a tax break estimated at $16 million a year for 30 years. A year later Intel got the same deal. After Intel got its tax break, Kitzhaber told the Oregonian editorial board, “This is not a revenue loser for the state, this is tax certainty.” Yeah, right. Both companies get to pay taxes based only on sales within the state, a very small portion of their worldwide business.
So part of Kitzhaber’s legacy is abetting the disinvestment of Oregon corporations in Oregon schools, universities, social services and law enforcement. Now he seems to want Governor Brown to broker a “compromise” with corporations and then call a special session to pass the compromise in order to head off IP 28. He says he is worried about a “divisive campaign” that will create “bitterness and polarization” that will prevent us from being able to “come together and effectively address the challenges that will confront our state in 2017.”
We say bunk. The former governor should read a new report by the Oregon Center for Public Policy, “The Gaming and Decline of Oregon Corporate Taxes,” that details how corporations are taking advantage of ordinary, hard-working Oregonians who are now responsible for paying 93.3% of the income taxes that support our schools, universities, and other state services. It’s hard to read this report and not get angry. There was a time, back in the 1970s, when corporations paid about one of every five dollars of state revenue. No more. And according to the report it’s going to get worse. If no changes are made to corporate taxes, by the mid-2020s, corporations will be paying less than 5% of state income taxes.
Some corporations have paid nothing in state taxes. According to the report, in 2013, there were 71 corporations with profits of over a half million dollars that paid no Oregon income taxes.
As the report states, “The decline of Oregon corporate income taxes did not occur by accident; it happened as a result of corporations gaming the system. The principal ways they have done so are by obtaining numerous tax subsidies and loopholes at both the state and federal level, by pursuing aggressive tax sheltering strategies, and by taking advantage of new corporate forms largely exempt from corporate income taxes.”
This is outrageous and it’s got to stop. So forgive us Governor Kitzhaber, for not being overly concerned about a “divisive campaign” on IP 28. If Oregon corporations want to argue that the status quo should be acceptable to average Oregonians who work hard and pay their taxes and support our schools and other public services, we say bring it on.