Subject to the will of Oregon voters next week, the citizen-initiated statutory Measure 118 would give Willamette students, their neighbors, their professors, their professors' children and any other 200-day Oregon resident around $1,600 annually.
It’s the latest West Coast “universal basic income” (UBI) project that has popped up in the last several years. Poverty and its associated harms have been reduced in UBI trials in Stockton and Oakland, California, as well as Alaska, which has implemented a UBI since 1976.
Anyone who watched TV over the weekend knows that the primary opposition campaign, “No on 118,” has been circulating advertisements asking Oregon voters to “defeat the costly tax on sales.” But M118 wouldn’t impose a consumer-level sales tax per se.
For context, there are two relevant kinds of corporations: C and S.
As it stands, C corps, or “regular” corporations’ taxes scale according to their amount of federally taxable income (profit, not gross sales). C corps are required to pay the higher of either the established minimum or a 6.6% to 7.6% tax.
S corps’ (a kind of pass-through entity) incomes are dispersed to personal income tax-paying stakeholders, alongside a meager flat minimum entity-level corporate tax of $150 across all brackets.
Broadly, M118 imposes a 3% tax on gross corporate income exceeding $25 million, to be compounded onto existing minimum flat tax rates determined by earning bracket. For S corps, the flat minimum entity level tax rate of $150 across all brackets would also increase past the $25 million mark to match that of C corps.
S corps are by far the most prevalent in Oregon, while C corp tax revenue — over $3 billion in 2023 — marks the largest contribution to the state general fund. M118 is projected to increase corporate tax revenue by $1.3 billion in its first biennium.
Resulting increases in corporate minimum tax revenue would then be used to fund a new “rebate” program, a form of UBI. Through the rebate, every Oregonian would be entitled to an annual tax-break or check worth their equal share of the rebate fund.
Proponents of M118 trace the measure’s mythic origins to the bars and coffee shops of Eugene, Oregon. There, chief petitioner Antonio Gisbert says he and a group of friends scratched together the legislation which would become Initiative 17, the precursor to M118.
A maverick, DIY mentality led the “Yes on 118” coalition to create their own signature-gathering firm entirely dedicated to qualifying 118 for the ballot — according to “No on 118,” their maverick mentality also created a haphazard piece of legislation.
“No on 118,” funded to the tune of $12 million by Nike and Koch Industries among many others, argues that an increased tax burden on corporations would ramp up consumer level prices, create taxes at every level of the supply chain, and reduce Oregon businesses’ competitiveness.
“No on 118’s” concerns seem muted by the fact that only 1.8% of corporations would see a tax increase under M118. That 1.8% could account for 94% of corporate tax revenue, however.
Corporations would be able to deduct some but not all of their new state taxes from their federal tax return, but high-earning S corps would still experience a drastic increase in tax burden.
In a recent report, the Legislative Revenue Office (LRO) expressed concerns about the effect of lessened income tax allocation to the general fund, a lack of solvency for retaliatory tax loss, a loss of funding for the rainy day fund and double counting for constitutionally marked educational funding, which M118 also counts for the rebate.
The Legislature would be responsible for solving these issues should M118 pass.
The LRO’s report doesn’t go so far as to analyze the efficacy of M118's “hold harmless” provision, which seeks to solve the issue of low-income rebate recipients losing out on government benefits like SNAP due to their newfound income.
Soon, Oregon voters — over 120,000 of whom placed M118 on the ballot — will be asked to weigh all of these factors in order to call a shot to be heard across every sphere of Oregon’s economy.
Comments