Wednesday, May 2, 2018

Issues worth discussing

We are in a Democratic "Era of Good Feelings," and it backfires.

Let's have a discussion of real issues.

Democrats all want to get along. They remember the Bernie-Hillary split, and indeed are still living it. People speak darkly of the "circular firing squad." No one wants to disagree and appear to ."go negative." Wise and earnest people tell me that Democrats shouldn't "give ammunition to Republicans." People cite Ralph Nader and Jill Stein, and their names alone are shorthand for suicidal division on the left.

If everyone agrees on policy then people distinguish themselves on the basis of personalities and campaign funding, rather than on issues. Campaigns are worse for it.

State Senate campaign for Medford-Ashland, SD-3. All four Democrats on the State Senate apparently agree that unions are great, that the LNG pipeline is bad, that Oregon should expand access to health care, that abortion should be available and state funded if necessary, that sanctuary cities are sound policy, that education should be better funded, that forests should be managed but not over-harvested, that climate change is real and human caused and that we need to restrict carbon use. All are openly and unapologetically progressive, liberal, feminist, environmentalist Democrats.

Julian Bell suggests a State Bank; no one disagrees publicly.  Jeff Golden says PACs have way too much influence; no one disagrees publicly.  
I wrote about this April 25. Click to review.

Kumbaya. It is killing us.

Time to debate real issues. State government has plenty of them, on the table right now.

1. Discounts for sole proprietors. There will be a one day special session on whether to add "sole proprietorships" to the list of people eligible for a discount on state taxes. The federal tax law means that certain business configurations, i.e. pass through entities, get a discount and regular taxpayers do not. The state is working out how Oregon will handle this. The Oregonian newspaper just published an article that confirms what this blog wrote about last week, that the primary benefit goes to the top 1% of Oregonians. The argument in favor of extending the discount is that the benefit helps, in Kate Brown's words, the "moms and pops." No doubt. But they are prosperous mothers and fathers, and in order to qualify they need only have one part time employee, e.g.a teenage child, and it raises the question of why a sole proprietorship or business organized as a "pass through" S-corp should get the benefit while a wage earning employee of an organization earning exactly as much money would not.  Are people who work for themselves any better or more deserving of tax cuts than people who work for an employer?  If, as a matter of policy, we want to give tax reductions to people making $500,000 a year (a significant portion of those benefited by the pass through discount), then why a sole proprietor who has a part time helper, but not some salaried person who has a part time housekeeper or lawn service? Both make good money and both hire people.  Where is the equity and fairness? Here is the Oregonian article: Click: Benefit goes to people earning $200,000 plus

Democrats and Republicans might disagree, and Democrats may well differ among themselves. The issue is timely and it involves that intersection of values and policy. It is a debate worth having.

2. Here is another: Should CCOs be organized as for profit businesses, or as non-profits? Allcare, the employer of candidate Athena Goldberg, is a for-profit business, just like the Safeway where I shop for groceries, the car dealership where I bought my last car, or the company where I worked for thirty years, Morgan Stanley. Safeway, Butler Acura, and Morgan Stanley have competitors, and they get their money from customers who have a multitude of choices. Coordinated Care Organizations--CCOs--get their money from taxpayers. There is an argument to be made that CCOs are more like public schools than they are like Safeway. We pay school superintendents well, but not million dollar salaries, like for-profit CEOs. School boards get public money and they operate in public, while CCOs operate in private.  If the school cuts the number of 3rd grade teachers in a school from 5 down to 4, and increases class size from 25 to 32, we do not give the Medford School Board members a personal financial bonus. However, if CCOs control costs by reducing service, the company increases its profits. Shareholders benefit.

Increasing profits is the goal of private business, and it raises the question of whether the incentives for a private business--profits and bonuses--are suitable for an entity that exists thanks to taxpayer funds, not private choices of shoppers. Maybe CCOs should be non-profit, like Asante, and their prime obligation should be to serve the taxpayers, and provide as much care as possible, not to reserve off some percentage to reward executives and stockholders for their risk and investment.

Or maybe for-profit CCOs are ok. There is an argument to be made.

 Businesses are widely thought to do a better job than does government at wringing out inefficiencies. I am confident there will be candidates and legislators delighted to argue that CCOs should be a private enterprise for-profit business, and the public is well served by this. The health and finances of the state are at issue. This is a debate worth having.
Click to go to the tax calculator
3. Oregon tax structure. Oregon has a very high income tax--9.9%--but relatively low property taxes and vehicle taxes, and no sales tax. The result is a flat 9.9% off the income for nearly everyone. Before the Trump/GOP tax law change, when the state tax was a deduction against the federal tax, Oregon's disparity with zero-income-tax Washington State was more tolerable for higher income Oregonians in the Portland area. Now that the deduction is capped, there is a giant incentive for businesses with high income employees--the ideal kinds of businesses for Oregon to recruit or home-grow--to locate someplace other than Oregon. An software engineer earning $250,000 in Clark County, Washington has nearly a $25,000 advantage over the employee living and working across the river in Portland. Is this wise policy for Oregon?  Doesn't Oregon's tax structure put us at a significant disadvantage to the neighboring states of Washington and Nevada, neither of which have an income tax? Are we going to face up to this?

Maybe we should talk about this. This, too, is a debate worth having.

Summary:  If Democratic candidates don't distinguish themselves with differences on matters of significant policy, then campaigns will fall to disagreements about the personal style of the candidates. Each of these three issues are matters of significance and policy disagreement. I suspect the Democrats will differ among themselves and the winner will certainly differ with Republican nominee Jessica Gomez.

Disagreement is good. Let's talk about the important things.


Cathy Shaw said...

This is an excellent blog. Raising awareness about the new tax law in regards to Oregon and sole proprietorships (which I understand make up 80% of the business sector in America) is quite eye opening.
And the issue with for-profit vs nonprofit in the CCO model is presented in clear and understandable comparisons.
Knowing that Alan Bates, when CCOs were first conceived wanted them to be non-profit, knowing that they are squirreling away millions of medicaid dollars to pay high salaries and fund political action committees whose purpose is to perpetuate their existence, and knowing that at least one CCO was purchased by a out-of-state hedge fund who could make off with these tax dollars intended for Oregon recipients, makes me ill. These, as you point out are medicaid dollars NOT being spent on healthcare for our most vulnerable.

Rick Millward said...

If Democrats could adhere to a Progressive Socialist Democratic value proposition (as opposed to a Corporate Democracy) the way forward would be much clearer. Regressives have incorrectly, but successfully, equated Socialism with Soviet Communism and hijacked the conversation, aided by an ignorant coalition of religious zealots and bigots, with some in the corporate suites.

The blind pursuit of "profits" also clouds what are complicated public policy issues.