I wrote this piece during the last session of the Legislature. It still has relevance as the new session gets started.

April, 2017.

The Oregon Legislature is gearing up to propose a large tax increase in order to avoid steep cuts in spending. And waiting in the wings is the lobbying arm of the public employees’ unions, A Better Oregon, which is preparing an initiative petition for next year’s ballot should it deem the Legislature’s tax increase inadequate.

Given the enormous influence of public employees in Salem, we should be unsurprised that the Legislature will likely propose the same kind of tax as is favored by A Better Oregon, a tax on the gross receipts of businesses.

But wait, didn’t voters overwhelmingly reject this tax last fall? They did indeed, in the form of Measure 97, which would have been the largest tax increase in Oregon history.

The proposals in play now are nothing more than a re- packaged Measure 97, a tax that voters correctly concluded would be passed onto the consumer in the form of higher prices.

Why try again? Oregon doesn’t need a new type of tax, especially one that is the evil twin of a sales tax. It would hit low- and middle-income people the hardest, with no easy way to exempt essentials like food and medicine.

The Legislature should first work with the taxes we have in place — corporate and, yes, personal income taxes. These are the devils we all know.

The mantra of the Measure 97 campaign was that corporations should “pay their fair share.” Sadly, we hear the same slogan coming from some of our legislators now. But the slogan is nothing more than one of those half-lies invented by A Better Oregon to obscure the truth.

The fact is that Oregon’s per capita corporate income tax receipts are actually about in the middle of all states with an income tax. The only reason total corporate collections lag behind in Oregon is the lack of a sales tax. Individuals in Oregon don’t pay sales taxes, either. Does that mean that none of us is “paying our fair share”?

If you want corporations to pay more, then raise the corporate income tax. Thoughtful proposals could find support within the business community, unlike the contentious gross receipts tax.

But if there’s one group that definitely is not paying its fair share, it is those individuals whose earnings put them in the top 1 percent of incomes.

A recent report from our state economist contained sobering statistics: In the last decade, the inflation- adjusted income of the top 20 percent of Oregonians went up 6.7 percent, while the middle 20 percent lost 1 percent and the bottom 20 percent lost a shocking 7 percent.

High-income individuals have done very well, while the rest of us have stagnated.

Yet Oregon’s 9 percent income tax rate kicks in at less than $17,000 of taxable income, while the top rate for high-income individuals is only 9.9 percent.

In this time of economic inequality not seen in a hundred years, these tax rates make no sense.

We should add two more top rates to Oregon’s personal income tax — one for the top 1 percent of earners, and one for the top 0.1 percent. These are people earning above approximately $325,000 and $1.5 million per year, respectively. For incomes above these levels, the top rates should be on the order of 12 percent and 15 percent, respectively.

We know that many high-income individuals pay a lower total effective tax rate than much of the middle class, especially if you include the payroll tax. These new rates would begin to correct this inequity.

By working within the tax system we know, and asking the most fortunate among us to contribute more, the Legislature can go a long way toward mitigating the draconian cuts to state services being considered while protecting low- and middle-income Oregonians from an additional tax they cannot afford.