Oregon’s vote for big new taxes to aid the homeless ups the urgency in Seattle

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It was billed as the first big test of the voters’ mood in pandemic America. The television ads cast the stakes in stark terms, with images of shuttered businesses and people wearing masks holding their heads in despair.

“In our worst crisis, with thousands out of work, when so many are hurting, is now the time to raise over $2 billion in new taxes?” asked one ad.

“People are frustrated. They’re out of work and they’re angry, and the last thing they’re thinking about right now is raising taxes,” predicted a political operative.

Man, was all that wrong.

This past week, voters down in Oregon loudly announced that at least here on the West Coast, the economic carnage from the coronavirus isn’t causing a retreat from expensive, big-government solutions. It’s doing the exact opposite.

Voters in and around Portland overwhelmingly passed a series of higher taxes that even backers acknowledged had become a “total wild card” because of the coronavirus shutdowns. Portland voters levied a 10-cent per gallon gas tax on themselves, while voters in a three-county area that includes Portland said yes, by nearly 60%, to an enormous $2.5 billion, 10-year plan to tackle homelessness.

Portland-area voters, like here, were already very pro-tax. But what was revealing about the vote is that polling showed the economic dislocation of the pandemic made voters even more eager than before to go big on paying for social services for the needy.

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The tax down there, which included a levy on profits for larger businesses, was proposed back in the winter before the coronavirus hit. The economic shutdown in March was seen as such a game-changer for business that five local chambers of commerce appealed to backers to withdraw the measure from the ballot (though some other business leaders continued to support it).

“Surely the (tax proponents) might have heard that McMenamins hotels and pubs, Powell’s Books and all restaurants and bars have shut their doors and laid off thousands upon thousands of employees?” argued the Portland Tribune newspaper. “Have they paid attention to the cancellation of all events in Oregon, which in turn has brought the economy to a near standstill?”

These arguments carried no sway. Not compared to the way the coronavirus is exposing huge structural inequities in society. Or how lots of people have realized they’re maybe only a paycheck or two away from needing help themselves.

In Seattle, this all means City Councilmember Kshama Sawant suddenly has the wind at her back for a major business tax here.

“It’s a wake-up call,” said Seattle City Council member Andrew Lewis, who hasn’t taken a position yet on Sawant’s $2.9 billion, five-year business tax plan. “For the business community around here, it means the ball’s in your court. Something needs to happen.”

For Lewis, that something is a $1.7 billion, five-year plan to build 6,500 units of housing with services, called the Third Door approach. It was announced this past week by a coalition of “unlikely allies” in business and social services. Unlike Sawant’s Seattle-only approach, it would be regional, as was the plan down in Oregon. It asks businesses countywide to pony up about $700 million of the cost.

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Sawant has also launched a drive to put her proposed tax on the ballot, in the form of Initiative 131. If it gets 22,040 signatures this summer it could be on the Seattle ballot in November.

Oregon voters levied their tax on business profits, while Sawant’s plan puts the tax on payrolls for more than 800 firms in Seattle as measured by revenue. Taxing profits is an easier sell because if a business is really struggling and makes no profit – which is the condition for many of them right now – then they pay nothing.

But a profits tax isn’t an option in Washington state, nor is there an income tax. These finer distinctions may not matter much, though —  especially sitting side-by-side with headlines like the one this past week, about how Amazon CEO Jeff Bezos alone has raked in $34 billion during the pandemic shutdown.

“I think people see that inequality is so rampant, and the coronavirus is making that clearer than ever,” Lewis said. “There’s a pent-up angst, and it’s definitely not just in Portland.”

Personally I like the regional approach better because homelessness isn’t just a Seattle problem. Also the tax hit would be lower for each business because it’s spread over a larger area.

But the big takeaway here is: A tipping point seems to have been reached.

We have debated in this space about how after coronavirus, “will we go back?” Back to same old ways, including “numbly looking the other way at crises in plain view like homelessness?”

Portland just answered that emphatically: “no.” It’s now the local political question of the year whether Seattle will follow suit.

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