Progressive Taxes Win Big In Oregon

Dean Baker
TPM Café, February 8, 2010

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The political establishment continues to be obsessed with the victory of Scott Brown in the Massachusetts Senate race. In fact, they are so obsessed they managed to almost completely overlook the success of two important tax initiatives in Oregon the following week.

Oregon voters passed by a margin of 54 to 46 a tax measure that will raise the tax rate on taxpayers with an income of more than $250,000 a year. They also approved a measure that would raise the tax paid by corporations in Oregon. Together the two measures are projected to raise $750 million over the next two years, approximately 5 percent of the state’s $14 billon budget.

This victory is striking because it shows that voters in Oregon were willing to support progressive taxation in order to avoid substantial cuts in public services. This is worth noting at a time when there is a conventional wisdom taking shape in Washington that the public is increasingly hostile to the government and will oppose taxes in any form.

It is true that Oregon is somewhat more liberal than most states, but it is not far out of line with the rest of the country. Gore won a very narrow victory in Oregon in 2000, as he did in the popular vote nationwide. Kerry took 51.6 percent of the Oregon vote in 2004. This is better than his national total, but not indicative of a state hugely out of line with national sentiment.

It is also important to remember that this was a special election centered on tax issues. The electorate that shows up in off-year elections is always skewed to the right and it is likely to be especially skewed when the topic is taxes. For these reasons, if anti-government anti-tax sentiment really has over-run the country, then we should have expected to see these Oregon tax measures going down by substantial margins, not coasting to victory.

So what is going on? First, to give credit where it is due, the groups that were fighting for the initiative did an outstanding job getting their message out. Voters in Oregon understood two things. First they understood that the tax increase would be relatively modest and that it would only apply to a small and affluent segment of the population.

Second, voters recognized that the alternative to the tax increases would be cuts in education and other services that they valued. There was no secret pile of waste, fraud and abuse that could be attacked in order to avoid cuts in social services.

The supporters of the initiatives also did the fieldwork necessary to get voters out to the polls, or actually the mailbox, since Oregon runs its elections with mail-in ballots. There was an especially large turnout from young voters who often stay home in off-year elections.

But this great legwork can only be successful if the electorate actually supports the measures at the polls, as they obviously did. The public was willing to trust that money put into the hands of the Oregon legislature will be mostly well used. Clearly Oregon voters were expressing a very different sentiment than the electorate that sent Scott Brown to the Senate in Massachusetts.

Some of the difference can undoubtedly be explained by the fact that the Massachusetts race featured a charismatic newcomer challenging a seemingly out of touch career politician. However, it is also clear that Massachusetts voters resented a political establishment that left the Wall Street banks more profitable than ever, while tens of millions of people are unemployed and/or facing the loss of their homes. Martha Coakley, the Democratic candidate, was identified with this establishment.

The political establishment likes to tell tales in which people are either for or against government. But, this does not fit most people’s view of the world. The vast majority of the public value public schools, streets without potholes, and well-working police and fire departments. However, they hate to see their tax dollars go toward making rich people even richer.

As a result of the bailout and the record profits and bonuses now being earned at Goldman Sachs and elsewhere, the Democrats are seen as being on the side of Wall Street. If the Obama Administration cannot move beyond symbolic measures and actually change the way things work on Wall Street, then Democrats are likely to continue to pay a big price in future elections.

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.