With some clever deceit and a lot of money, ballot measures are easily manipulated to hide their true purpose and impact. Ballot Measure 103 and 104 are prime examples. Offered as protections for a vulnerable public, they really create safe harbor for tax breaks and make it harder to fund schools and other government functions.
Supporters hail Measure 103 as a compassionate effort to protect consumers, especially the low-income sector, from the animus of a sales tax on food and beverages. But it is really about a constitutional carve out of a tax break for the big grocery chains that spent over $2 million to get it on the ballot.
There’s no sales tax threat. A sales tax has been overwhelmingly defeated nine times since the 1930’s, the last time in 1993 when 75% of the voters said “No!” That measure included an exemption for food, a low-income refund and a working-families earned income tax credit.
So, it isn’t likely there’s a sales tax proposal coiled to strike soon, let alone one that would apply to food.
The financiers of Measure 103 aren’t shielding consumers from paying a sales tax when buying food, they’re protecting their own sales revenues from being taxed. Hidden in the measure is a prohibition on applying the corporate minimum tax on the sale and distribution of groceries. Oregon uses the corporate minimum tax to assure corporations pay at least some income taxes. Corporations can use tax breaks and accounting methods to zero out their income taxes, so the corporate minimum tax is a graduated tax based on sales revenue rather than income. Without it corporations in Oregon could avoid paying any state income tax.
Measure 103 would give the Kroger, Albertson/Safeway, and other grocery chains supporting it, a constitutionally mandated exemption from the corporate minimum tax and other income tax alternatives we might need to finance education.
Measure 104 is even worse when it comes to protecting tax breaks and the status quo. Advocates say it’s about fairness and accountability but it’s really about making it easier to get tax breaks and harder to alter or remove them.
Currently, the state constitution requires a three-fifths vote of the House and Senate to pass “bills of revenue,” which the courts and the legislature have interpreted as meaning bills that levy a new tax or increase an existing one. Measure 104 expands that super-majority requirement to fees and to elimination or reduction of tax breaks.
Tax breaks are considered tax expenditures because they are the same as spending tax dollars that would have been received absent the tax adjustment. The Oregon Department of Revenue reports there are 367 tax expenditures, 190 related to income tax, with an estimated revenue impact of $13.5 billion this biennium. For a financially strapped budget that’s a lot of lost revenue.
In legislative politics, it’s easier to stop something than it is to pass anything. No matter the discontent over the status quo it’s hard to reach consensus on the best alternative. That’s made even harder when there are interests, like the Oregon Association of Realtors which spent $700,000 to get Measure 104 on the ballot, who benefit from keeping things the way they are.
It’s not that tax breaks are necessarily bad, it’s that Measure 104 means it only takes a simple majority to provide a tax break but a super-majority to reduce or remove it. It pretty much locks in tax exemptions once granted by giving special interest lobbyists an easier path to stop anything that might increase their clients’ contribution to funding state needs.
In tight financial times, cementing the super-majority in the constitution for fees and changes in tax breaks guarantees continued budgetary gridlock. The super-majority requirement limits options and cedes budgetary control to a small “super-minority” that can hold the budget process hostage by thwarting the will of the majority.