What Motivated Oregon Voters To Raise Taxes?

Originally published on October 3, 2011 4:04 pm

The Obama administration is floating the idea of increasing taxes on families earning more than $250,000 a year.

Last year, the state of Oregon did something similar.

It didn't generate quite as much money as expected — but it did generate plenty of resentment.

'A Pretty Historic Win'

On election night 2010, Oregonians voted to increase income taxes on people making over $125,000 a year, and to increase corporate taxes.

"It is my great honor and delight to be able to tell you that tonight the voters of the great state of Oregon decided to protect education," said campaign spokesman Steve Novick.

Fighting over the cheers, Novick went on to say Oregonians decided to protect public safety, social services — and the middle class.

"The campaign in Oregon was a pretty historic win," says Kevin Looper, who directed the effort to pass the taxes. "I mean, since 1930, we had not succeeded on a statewide tax vote. And the electoral history is quite literally littered with defeats."

Groups have tried and failed in Oregon to create a sales tax — nine times.

But in the case of this tax, Oregonians agreed. And that, says Looper, caught the attention of many states, and the Obama administration.

"After the campaign, the White House called and said, 'Hey, we'd like you to come back and talk to us a little bit about how the campaign went,' " he says.

Looper shared his strategy and public research. But the main question everyone had was: How did you do it?

"The great eureka moment was realizing that, you know what, in voters' minds, this battle is not left-right. It's up-down," Looper says. "You know, it's class war when we're cutting Medicare. It's class war when we're cutting teachers out of our public schools."

Looper says research showed Oregonians had a keen sense that the wealthiest folks weren't doing their fair share. And the campaign to pass ballot measures 66 and 67 made use of that sense — with ads picturing executives walking off private jets and well-dressed couples sipping champagne.

"It's easy to show a big fat cat and drum up a little animosity to him. But it's the wrong way to do it," says Marty Kehoe, a prominent Portland real estate developer and a wealthy man.

He says taxing the rich is all well and good, but over the past couple of years, the city, the county and now the state have all taken a slice — and in the long run, he says, it's hurting the area.

"We need an economic base in order to make Oregon and Portland livable," Kehoe says. "But when you bring in [bills] like measure 66 and 67, do those themselves cause the exodus of successful people and business people from Oregon? The answer is no. But they are the straw that breaks the camel's back."

He says hundreds of Oregonians have crossed the Columbia River to live in Washington.

Capital Gains Down

But wherever you stand on taxing the rich, Oregon's coffers did not get all the money it expected. The state projected an extra $180 million, but only $130 million materialized.

Chris Allanach, an economist with Oregon's revenue office, says the numbers aren't detailed enough to say the loss was because richer Oregonians moved out of state. But what he can say is that capital gains were down almost 60 percent.

"It certainly could be that people saw the rates in 2009, or what they might be, and then decided not to realize some of those gains," Allanach says.

So, some people saw the tax coming and delayed selling stock or other investments.

There could be other reasons the tax didn't make the money expected — the recession was deeper than thought, and maybe Allanach's economic prediction models were a little off.

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Transcript

MELISSA BLOCK, host: The Obama administration is floating the idea of increasing taxes on families earning more than $250,000 a year. The state of Oregon did something similar just last year. As Kristian Foden-Vencil of Oregon Public Broadcasting reports, the hike didn't generate quite as much money as expected, but it did generate plenty of resentment.

KRISTIAN FODEN-VENCIL: Election night 2010, Oregonians voted to increase income taxes on people making over $125,000 a year and to increase corporate taxes.

STEVE NOVICK: It is my great honor and delight to be able to tell you that tonight the voters of the great state of Oregon decided to protect education.

FODEN-VENCIL: Fighting over the cheers, campaign spokesman Steve Novick went on to say Oregonians decided to protect public safety, social services and the middle class Kevin Looper directed the effort to pass the taxes.

KEVIN LOOPER: Well, the campaign in Oregon was a pretty historic win. I mean, since 1930, we had not succeeded on a statewide tax vote. And the electoral history is quite literally littered with defeats.

FODEN-VENCIL: Groups have tried and failed to create a sales tax here nine times. But for this tax, Oregonians agreed. And that, says Looper, caught the attention of many states, and the Obama administration.

LOOPER: After the campaign, the White House called and said, hey, we'd like you to come back and talk to us a little bit about how the campaign went.

FODEN-VENCIL: Looper shared his strategy and public research. But the main question everyone had was how did you do it?

LOOPER: The great eureka moment was realizing that, you know what, in voter's minds, this battle is not left-right. It's up-down. You know, it's class war when we're cutting Medicare. It's class war when we're cutting teachers out of our public schools.

FODEN-VENCIL: He says research showed Oregonians had a keen sense that the wealthiest folks weren't doing their fair share. And the campaign to pass measures 66 and 67 made use of that sense with ads picturing executives walking off private jets and well-dressed couples sipping champagne.

(SOUNDBITE OF AD)

UNIDENTIFIED WOMAN: Oregon can no longer afford to let big corporations and the rich off the hook. Measures 66 and 67 will protect middle class families by requiring...

MARTI KEHOE: It's easy to show a big fat cat and drum up a little animosity to him. But it's the wrong way to do it.

FODEN-VENCIL: Marti Kehoe is a prominent Portland real estate developer and a wealthy man. He says taxing the rich is all well and good, but over the last couple of years the city, the county and now the state have all taken a slice, and in the long run, he says, it's hurting the area.

KEHOE: We need an economic base in order to make Oregon and Portland livable. But when you bring in like Measure 66 and 67, do those themselves cause the exodus of successful people and business people from Oregon? The answer is no. But they are the straw that breaks the camel's back.

FODEN-VENCIL: He says hundreds of Oregonians have crossed the Columbia River to live in Washington. But wherever you stand on taxing the rich, Oregon coffers didn't get all the money expected. The state projected an extra $180 million, but only 130 million materialized. Chris Allanach, an economist with Oregon's Revenue Office, says the numbers aren't detailed enough to say the loss was because richer Oregonians moved out of state. But what he can say is that capital gains were down almost 60 percent.

CHRIS ALLANACH: It certainly could be that people saw the rates in 2009, or what they might be, and then decided not to realize some of those gains.

FODEN-VENCIL: So, some people saw the tax coming and delayed selling stock or other investments. There could be other reasons the tax didn't make the money expected - the recession was deeper than thought; and maybe Allanach's economic prediction models were a little off. For NPR News, I'm Kristian Foden-Vencil in Portland. Transcript provided by NPR, Copyright NPR.