Editorial endorsement May 2023: Vote ‘no’ on Multnomah County capital-gains tax

There’s broad support throughout the community for providing free legal support to tenants who are facing eviction. With our crushing housing crisis, protecting tenants’ rights and helping negotiate solutions with landlords can make all the difference in keeping families housed.

But Measure 26-238 on the May ballot proposes a supremely inefficient, regressive, untested and ill-informed way to fund such support. The measure calls for a new .75% capital gains tax in Multnomah County to create a Tenant Resource Office and hire lawyers for tenants facing an eviction, regardless of income level. The measure does not exempt such common capital gains income such as the proceeds from primary home sales, retirement plan withdrawals or small businesses selling equipment. And the cost of simply collecting the tax is estimated to run more than $19 million in the first year and about $7 million each year afterwards – an absurd expense compared to the $12 million to $15 million that organizers envision raising annually for legal aid.

Considering that taxpayers already fund legal support for tenants through general fund revenue and an existing homeless services tax, there’s even less reason to vote into law such a poorly-developed ballot measure. Voters should reject Measure 26-238, support continued funding of legal aid for eviction prevention and press elected leaders to make faster progress on alleviating our housing shortage.

Measure supporters, including tenant groups, lawyer associations and teachers unions, argue that it will hit mostly wealthier residents. But their analysis fails to acknowledge that without critical exemptions, the tax is far more sweeping in scope. An analysis by Portland-based accounting firm Perkins & Co. notes that seniors, sole proprietorships and people who would otherwise be exempt from federal and state income taxes would still be subject to the provisions of this capital gains tax.

Eviction Representation for All campaign supporters say that wasn’t their intention. But their stated intentions do nothing to change the measure going before voters. In contrast, legislators in Washington state who passed a new capital gains tax explicitly exempted home sales and retirement plan withdrawals while also providing a blanket $250,000 deduction to help protect most Washingtonians from paying the tax. The Eviction Representation for All measure, developed by activists, failed to include any of that, reflecting how sloppily written it is. In fact, the only entities exempt from the tax are large businesses. The county would have to adopt additional legislation to allow for additional exemptions, which is neither easy nor guaranteed.

It makes no sense to create a new tax that will cost more to administer in the first year than it will generate for the intended purpose. It makes no sense to increase the tax burden on county residents ­– Portlanders bear the second highest marginal tax rate in the country – when local taxpayers are already providing hundreds of millions a year specifically to address and prevent homelessness. It makes no sense to vastly increase the complexity of living and working in Multnomah County for its hundreds of thousands of residents to raise $12 million.

In an endorsement interview with The Oregonian/OregonLive Editorial Board, supporters of the measure could not point to any other jurisdiction that imposes a capital gains tax at the local level. They could not refute the city of Portland’s estimates for the high costs of collecting the tax, suggesting instead that the county change the effective date of the tax – Jan. 1, 2023 – that is currently in the measure. Again, they are looking to the county to fix the flaws they wrote into their measure.

It’s worth noting the broad cross-section of people and organizations opposing this tax: Oregon 3rd Congressional District Rep. Earl Blumenauer, D-Portland; Multnomah County Chair Jessica Vega Pederson and commissioners Lori Stegmann, Sharon Meieran and Susheela Jayapal; Mayor Ted Wheeler and the entire Portland City Council; Metro President Lynn Peterson and all three Metro councilors whose districts fall substantially within Multnomah County. Then, there are organizations including Tax Fairness Oregon, Asian Pacific American Network of Oregon, Oregon Business and Industry, Black Business Association of Oregon, Portland Business Alliance and Hacienda Community Development Corp. While these groups may disagree on a number of issues, they are united behind the belief that this measure should be defeated.

Too often, voters have approved measures based on hopes and intentions rather than evaluate the mechanics of how the initiative would try to achieve them. Only after the fact – when it’s apparent that a measure made no firm commitments on how money will be used or that a tax will automatically increase in a few years – do voters delve into the details. Multnomah County residents should do their homework up front on this issue and recognize that “no” on Measure 26-238 is the right call.

-The Oregonian/OregonLive Editorial Board