Oregon Counters Massachusetts

The stunning win of a Republican novice in the Massachusetts Senate race to replace Ted Kennedy is well known.  It is being interpreted as a sign of Obama’s fading popularity and also as a sign that the US electorate wants more right-of-center policy.  To show the flaw in thinking that right-wing answers to the economic crisis are the only popular option, consider the results of the January 26, 2010 referendum in Oregon.

That referendum’s 1.2 million voters decisively passed Measures 66 and 67 by margins of over 53 to 46.  Briefly, those measures explicitly protected state outlays for education, medical care, and public safety over the next two years by raising over $700 million in additional taxes on corporations and on wealthy individuals.  The passage of those measures proves that a left of center coalition — one that actually does the sorts of things that Obama promised in his campaign — can garner mass support and win elections.  But it proves more as well.

A somewhat left-of-center Democratic Party leadership had passed equivalent bills in the Oregon legislature in 2009.  Business and conservative groups mobilized into and heavily funded Oregonians Against Job-Killing Taxes to campaign for a referendum that would undo the legislation.  The support for a yes vote in the referendum — essentially endorsing the bills passed in the legislature — was mobilized by unions, teachers’ and parents’ groups, organizations concerned about sustaining medical and other public services.  Their coalition with the Democratic party leadership prevailed.

Income taxes on corporations will now be raised in Oregon from a minimum of $10 per year per corporation (yes, that is not a misprint) to $150 per year.  The original $10 minimum had been set by the Oregon legislature during the Great depression and never changed.  Income tax rates will go up a few points on households earning over $250,000 per year and a few more points on households earning over $500,000 annually.  Those rates had also not been changed since the 1930s.  In effect, Oregonians voted to preserve basic social services by taxing corporations and the richest minority of their citizens by modest extra amounts on the grounds of their greater capacity to pay.

According to The Oregonian, the opponents of these new taxes spent $4.6 million while supporters spent $6.9 million on the referendum.  That suggests funding resources for such initiatives as well.

One obvious lesson from this referendum is that a left-of-center program responding to the economic crisis is a serious political proposition with the capacity to win now.  More interesting is another lesson implicit in the first.  The referendum endorsed the notion that the burden of state programs benefitting the mass of people directly and everyone else indirectly ought to fall disproportionally onto two groups: those most able to pay and those who have been underpaying for a long time.  The campaign around the referendum effectively exposed that these were largely the same people and corporations.  Maybe now other ways to implement the notion of taxing those most able to pay and using the funds creatively to deal with the economic crisis will emerge.  Consider two examples.

The inequality of wealth holding in Oregon (and across the nation) is greater than the inequality of income.  Indeed, the very wealthiest Oregonians hold the bulk of their wealth in the form of stocks and bonds.  That form of wealth is not taxed by any level of government in Oregon nor by the US government.  Wealth held in other forms — such as land, homes, and businesses — is taxed by localities in Oregon and elsewhere.  Land, homes, and businesses are the forms of wealth owned by large portions of the population.

The people of Oregon would have done more to bring fairness to the tax structure of their state and the country had they taxed large holdings of stocks and bonds (perhaps exempting retirement or savings accounts up to a certain level, etc.).  Taxing wealth in the “intangible” form of stocks and bonds is not only a long overdue correction of a basic tax injustice.  It also taxes just those who gained most in the period from 1980 to 2000 when the stock market — and thus the values of their stocks and bonds — rose dramatically.  Those years were also the time when the average real wages of American (and Oregonian) workers — those who own land and homes if they own anything — did not rise at all.

Oregon’s December 2009, unemployment rate was 11 per cent, above the national average.  If you add those Oregonians who have part-time but want full-time jobs and those unemployed who have stopped looking for work, the total number is more like 17 or 18 per cent.  Nearly every Oregon family likely has someone close — a relative, a friend, a neighbor — in that situation.  Everyone is affected by it.  A small extra tax imposed on those most able to pay would affect them minimally, but it could provide a large fund to provide start-up cash for unemployed people seeking to form new business ventures.  Here’s how it might work: only unemployed could work in such new businesses (thereby maximizing the employment impact).  They would form, work in, and run these businesses.  They would be their own board of directors (thereby maximizing the range of skills such ex-unemployed could acquire).  Once such new businesses earn profits, a portion of those profits would have to go to repaying the start-up cash they received so other unemployed can use it in the same way.  Existing businesses, unions, churches, and community groups could all assist such new businesses with the state of Oregon matching that support dollar for dollar.

These are but examples of creative ways to respond to the economic crisis and to make positive changes in the lives of those most damaged by it.  If people can get out of the mental straight-jacket of thinking that “the government has no money” to do things or that nothing new or creative can be done, they can generate many more new programs.  The money for government programs is there if and when people challenge the ruling conservative wisdom that only thinks in terms of more or less taxes instead of thinking about who can and should pay the taxes that are now so desperately needed and might accomplish so much.  In a small but significant step, Oregon’s referendum moves in that direction.

Richard D. Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York.   He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications.  Check out Richard D. Wolff’s documentary film on the current economic crisis, Capitalism Hits the Fan, at www.capitalismhitsthefan.com.  Visit Wolff’s Web site at www.rdwolff.com, and order a copy of his new book Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It.

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