Measure 118 would do more harm than good

Oregon Ballot Measure 118 is poorly designed. Its enactment would likely trigger several unintended, damaging consequences. Accordingly, the Oregon Center for Public Policy recommends a “no” vote on the measure.

Measure 118, also known as the Oregon People’s Rebate, would increase the state corporate minimum tax to 3% on business sales of more than $25 million in Oregon. The revenue raised from the measure would be distributed equally to all Oregon residents.

Although taxing large corporations to fund cash payments to families facing economic insecurity is a sensible policy, Measure 118 comes with too many downsides.

Measure 118 would reduce available funding for schools and other essential services. If the measure were approved, some revenue from corporate taxes that currently fund education and other essential services would instead help pay for the cash rebates — including rebates for rich people. One of the more likely scenarios is that the Oregon General Fund — which pays for key services such as education, health and human services, and public safety — would lose more than $3.4 billion in the 2031-33 budget period.

Measure 118 would send rebates to people who don’t need them while making it harder to address existing crises. The measure would send rebate checks to everyone, including well-off people who don’t need it. The reality is that Oregon can only spend money it raises, so those limited dollars need to be spent on addressing the state’s most pressing needs, such as the lack of affordable housing, unaffordable child care, and the rising cost of higher education. Not only would a significant portion of Measure 118 go to people who do not need a rebate, but the proposal would make it more difficult to address pressing needs by foreclosing revenue-raising options and making it more difficult politically to raise revenue.

Measure 118 would likely result in vulnerable Oregonians losing public benefits while reducing the flow of federal dollars to Oregon. The federal government is likely to consider the state cash rebates created by the measure as taxable income, as well as income for determining eligibility for safety-net programs like the Supplemental Nutrition Assistance Program (SNAP). Thus, vulnerable Oregonians could lose partial or full access to such benefits. While the measure tries to anticipate this problem by providing “hold harmless” payments to make up the difference, the reality is that these payments would arrive well after families have lost their benefits and the ensuing financial harm. The “hold harmless” payments themselves could count as income for benefit determinations, potentially leading to a benefit-loss spiral. Finally, triggering the hold harmless provision would mean that a significant portion of the revenue raised by Measure 118 would simply go to fill the loss of federal dollars that would otherwise flow to Oregon — a loss caused by the measure itself.

While we agree that big corporations should pay more in taxes and that giving cash rebates to vulnerable families is an effective way to improve economic security, Measure 118 would do more harm than good.