Tag Archives: Steve Novick

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Only in Portland: Mindless CEO Taxes

liberal-logic

Eric Fruits, an Oregon economist I admire, made some illuminating comments today on Portland’s misguided attempt to tax CEO pay:

Last week, Portland passed a first-in-the-nation income tax surcharge on companies whose CEOs earn more than 100 times the pay of the median worker in the firm

The tax is on companies that are subject to a new Securities and Exchange Commission rule requiring publicly traded companies to report the ratio of CEO pay to its median pay beginning in 2017. Thanks, Dodd-Frank.

It is estimated that the measure will ultimately raise about $2.5 million annually from some 550 companies that pay Portland’s Business License Fee, which is a nice was of saying “business income tax.”

The pitch from the city commissioner who pushed the ordinance (Portland City Commissioner Steve Novick) is that the surcharge is designed to reduce income inequality. It’s supposed to punish high-income CEOs and the money raised is promised to go to fund affordable housing.

In reality, most of the CEOs targeted in the tax don’t live in or near Portland and the money actually goes into the city’s general fund to be spent however council sees fit. So the tax really won’t do anything to reduce CEO pay, and the money collected will do nothing to raise the incomes of the poor.

A more interesting development may come with the new Congress. Republicans have been targeting Dodd-Frank for a massive overhaul. It wouldn’t take much to strike the pay ratio reporting from the law. Then—poof—the tax has no monitoring mechanism.

So, why would a sitting city commissioner spend so much effort on an empty gesture poking business in the eye?

What if I told you that this commissioner was the first incumbent commissioner in decades to lose his city council seat—by a whopping 10 percentage points—to an unknown newcomer. Sometimes policy is driven by politics.

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Sock it to ’em: Hales and the left long for more taxes

More taxes. That’s the left’s answer for everything. Usually, they try to spread out the tax increases so you won’t notice how the total is escalating. But this year, they’re going whole hog.

Funny Tax Picture 2

On Tuesday, Portland Mayor Charlie Hales proposed an $8.7 million increase in the Business License Fee. Now 2.2 percent of a business’ net profit, the fee would increase to 2.5 percent for 25,200 Portland businesses.

“We need to be responsible leaders by providing enough revenue to deliver basic City services and invest in making lasting progress on our challenges,” Hales said. “A slightly larger fee on business’ profits will have a far-reaching, positive impact on the city as a whole.”

Meanwhile, Our Oregon, a coalition of unions and progressive groups, is promoting Initiative Petition 28 for the November 2016 ballot.

The measure would raise the corporate minimum tax on Oregon sales of more than $25 million a year from the current minimum of $50,000 to $30,001 plus 2.5 percent of the excess over $25 million. The tax would be based solely on sales, not profit.

The Legislative Revenue Office estimates the corporate tax measure would raise $5.3 billion during the 2017-2019 biennium. Corporate taxes during that biennium under the current system are projected to reach about $1.1 billion.

In other words, the measure would increase corporate tax collections per biennium by a whopping 400 percent in one fell swoop.

“If that passes, we’ll have a lot of money to pay for stuff,” said Rep. Mitch Greenlick (D-Portland).

All this would be on top of Portland’s much-maligned Arts Tax, which a large swath of the city’s liberal population isn’t paying, and an additional 10 cents a gallon gas tax in Portland, the brainchild of Portland Commissioner Steve Novick, that would generate $64 million over the next four years if voters approve it on May 17.

Yesterday, May 3, an Oregon judge approved ballot language for another tax, a payroll tax that would support Portland State University. Supporters will now begin collecting signatures to get the tax on the ballot in November. The proposed one-tenth of 1 percent payroll tax on wages paid by Portland-area businesses would generate about $40 million annually for PSU.

And if all these new taxes aren’t enough, the increases in the minimum wage that the Democrats in the state Legislature just pushed through will start in July.

Meanwhile, Gov. Brown is meeting in Portland today with lawmakers and business executives to start the process of crafting a multi-billion dollar funding package for state roads. The package would likely involve higher gas taxes and vehicle registration and driver license fees.

Hold on  to your wallets, folks.