New Oregon political party blasts ‘regressive’ transportation taxes

Presenter: We’ve been talking with Alan Cohen from a new political party in Oregon called We The People. Alan, it seemed like the state budget was in good shape, and now suddenly there’s a huge deficit. What happened? 

Alan Cohen (We The People): The federal government can print money and run a deficit; state governments cannot. Recognizing this, the federal government has provided funds to state governments to subsidize various projects and enterprises. In 2022, federal funds comprised 36% of state government and 6.2% of local government revenue.

[00:00:34] Outlays of federal funds to state and local government were 17.7% of total federal outlays, a larger percentage than at any time since the 1970s. So why are state governments now finding it harder to make ends meet? Because in 1970, Medicaid was earmarked for only 11.3% of the funding, but that percentage has been rising and in 2023 reached 56.8%.

[00:01:07] As the cost of health care has skyrocketed, funds for other state activities have been drying up. In August, economists told lawmakers: Under the Trump administration’s tax and spending policies, Oregon will see a two-year budget (with a positive $472 million balance) evaporate and turn into a $373 million deficit. 

[00:01:35] Presenter: What other programs are impacted by federal funding, and how is the state responding? 

[00:01:40] Alan Cohen (We The People): Highways, tenant-based rental assistance, child nutrition programs, Stafford Act disaster assistance, child care and development block grants, education stabilization fund, education for the disadvantaged, and Temporary Assistance to Needy Families (TANF).

[00:01:59] Of course, each state also has their own programs, which are also funded by the federal government in part.

[00:02:07] Oregon already has addressed the transportation shortfall with a new law passed in September of this year. The new sources of income include:

1. A gas tax increase from 40 to 46 cents per gallon, effective Jan. 1, 2026.
2. An increase in annual registration fees from $43 to $85 for passenger cars, $63 to $105 for utility vehicles, light trailers, low-speed vehicles, and medium-speed electric vehicles, and $44 to $86 for mopeds and motorcycles.
3. Increasing title fees for passenger vehicles from $77 to $216.
4. Doubling the payroll tax used to support public transit from 0.1% to 0.2% until Jan. 1, 2028.
5. An increase to registration surcharges for electric and highly efficient vehicles from $35 to $65 annually for cars with a 40 mile-per-gallon rating or higher, and from $115 to $145 annually for electric vehicles.

[00:03:34] Presenter: What do you think of the new Oregon transportation taxes? 

[00:03:37] Alan Cohen (We The People): Taxes can be progressive (decreasing inequality), neutral, or regressive (increasing inequality). Gas taxes are sales taxes and sales taxes are regressive. Registration and title fees are also regressive. Everyone pays the same dollar amount of tax for these three items, but they constitute a much smaller percentage of wealth for the rich than for the rest of us.

[00:04:04] Payroll taxes are also regressive. The Social Security tax is a good example. Even people who do not earn enough money to pay income tax have to pay Social Security tax, and now a higher public transit tax. Again, a smaller percentage of wealth for the rich than for the rest of us.

[00:04:20] With President Trump and Congressional Republicans cutting $15 billion from essential services, government-sponsored health insurance, food assistance, and education programs and other services over the next six years and being responsible for reducing state funding right now by an additional $888 million, the damage is here, Gov. Tina Kotek said in a statement. ‘More Oregon families are experiencing tougher financial situations, not by chance, but because of the economic uncertainty coming straight from the Trump administration.’

[00:05:02] But the Democratic Party solution to the federal cut in funding for services to provide a tax cut for the rich, a policy clearly calculated to increase economic inequality, has been to pass a law that funds transportation with regressive taxes and so increases inequality. 

[00:05:21] It should be pointed out that the state Republican Party’s solution was to cut the services. It was a joint venture of the two dominant parties: The federal Republicans increased the economic inequality and the state Democrats increased it further. That’s what’s been happening for 50 years behind all the talk of helping the people.

[00:05:42] Presenter: What’s a better solution? 

[00:05:44] Alan Cohen (We The People): Unlike the two main parties, the We the People party believes that the citizens of Oregon should decide not only which services to fund, but also how to fund them.

[00:05:54] If money for services deemed essential by the people of the state of Oregon is being cut by the federal government to decrease taxes for corporations and the rich, that money should be replenished by increasing state taxes on corporations and the rich.

[00:06:10] A balanced tax increase mirroring the federal tax decrease would make the most sense. Reasonable supplements or alternatives might be to:

1. Rescind or at least stop providing new tax abatements; 
2. Audit the tax returns of individuals and families with annual incomes greater than $500,000 and corporations with revenue more than $500 million per year or families with wealth greater than $10 million; and/or
3. Increase inheritance taxes on those with more than $5 million in wealth by perhaps 3%. The present tax in Oregon is 10% to 16% on estates of more than $1 million.

[00:06:55] The rich, by the way, are preparing a referendum to do away with estate taxes in Oregon altogether. Making these changes would require us to decouple our state tax policy from federal tax policy but that would probably make sense anyway with all the changes coming from Washington.

[00:07:15] Presenter: What are the benefits of this approach? 

[00:07:17] Alan Cohen (We The People): These proposed taxes would be progressive taxes. Tax abatements provide freedom from taxes for several years. When a business moves into new premises, the city and or state will often cancel their tax payments for 10 years. Imagine what that would be like for a new homeowner, no property taxes for 10 years.

[00:07:39] But businesses, particularly established businesses moving here, should pay their taxes just like everyone else.

[00:07:47] Inheritance taxes bring in substantial amounts of money, and they help to level the playing field for the next generation. They have been cut at the federal and state level in parallel with the cuts and income tax with similar effects on inequality.

[00:08:03] An increase in the gas tax would probably also be reasonable to give the drivers who benefit some skin in the game, but the people who might have to go without a car due to the tripling of title fees, doubling of registration fees, and doubling of payroll taxes would have been spared the new expenses–had these progressive approaches comprised the new law instead of the Democrats’ regressive measures.

[00:08:30] And the same thinking applies to providing for the other components of the federal funding shortfall–or what is left of it after the sudden discovery of quote ‘found money’ that has suddenly shrunk the deficit from $373 to $63 million. Were the original figures presented to get the transportation law passed and tarnish the Republicans? We will almost certainly never know, for sure, since today government under either party no longer answers to the people before or after it acts.

[00:09:04] Presenter: That’s Alan Cohen from We The People Lane County, with a look at how the major political parties have pushed through regressive taxes. For more information, you can contact Alan at WTPLane.org.