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'Hit the rich' tax-hike proponents in California cheered by Oregon vote

January 27, 2010 |  1:48 pm

California voters were accused of "class warfare" in 2004 when they approved a proposition that slapped a 1% extra tax on the state's highest earners.

If that was a declaration of war on the upper class, Oregon voters just launched a major new offensive.

Oregonvote In a bid to boost revenue amid the lousy economy, Oregonians on Tuesday said yes to raising the state’s highest marginal income tax rate from 9% to 11% -- topping even California’s maximum rate of 10.55%.

The new 11% Oregon rate will apply to income above $250,000 for individuals and $500,000 for couples.

A slightly lower new rate of 10.8% will apply to income between $125,000 and $250,000 for individuals and between $250,000 and $500,000 for couples.

The new 11% rate ties with Hawaii for the highest marginal tax rate among the 50 states.

Oregon voters also approved a ballot measure to boost taxes on corporations.

Oregonians have repeatedly refused to approve a sales tax (the state is just one of four that has neither a retail sales tax nor a so-called gross receipts tax) but the income- and business-tax-hike proposals passed handily, each with more than 53% of the vote.

As my colleague Kim Murphy wrote earlier this week, ballot Measures 66 and 67 were viewed as a test of “how willing voters are to accept tax increases targeted at those theoretically best equipped to pay them.”

But Phil Knight, the founder of Nike Inc. -- probably Oregon’s most famous home-grown company -- has warned that passage of the measures would fuel a “death spiral” for the economy, driving away companies and entrepreneurs.

In California, however, the victory in Oregon has thrilled some pro-tax-hike groups.  Robert Cruickshank of the Calitics blog wrote today:

It's a message that works nationally. And it's a message that'll work here in California. Voters don't like seeing their neighborhood schools close, or mass layoffs of teachers, or ending care for the disabled, or kicking kids off of health care. They don't want it, and are willing to raise taxes to prevent it.

All eyes now turn to Sacramento. Oregon proved, beyond any doubt, that anti-tax sentiment can be beaten by progressive taxes on the wealthy and corporations in order to save programs people like. The message could not possibly be any clearer. Voters want their programs saved, and are willing to tax the elite to do it.

In 2004, Californians approved Proposition 63, which slapped a 1% surtax on incomes above $1 million to fund county mental-health programs.

For incomes below $1 million California’s top marginal tax rate now is 9.55%.

Eight state legislatures last year raised tax rates specifically on higher-income earners. The California Legislature raised tax rates on everyone, lifting each marginal rate 0.25 of a percentage point.

-- Tom Petruno

Photo: Pro-tax-hike supporters in Oregon late Tuesday. Credit: Doug Beghtel / The Oregonian