Oregon could become the first state to tax big companies and send the cash to all residents

This story was originally published by Stateline.

PORTLAND, Ore. — The pitch intrigued nearly everyone who encountered a petition gatherer seeking signatures in Oregon: Would you like a $750 annual rebate from the state, for each member of your household? Paid for “by making giant corporations pay their fair share”?

Voters signed on to the concept in droves, catapulting the initiative commonly known as the Oregon Rebate to November’s ballot. If passed, it would make Oregon the first state to increase the minimum tax on large businesses and send the cash to all residents, guaranteeing them a minimum income.

“I’m not exaggerating here, but we got an extremely positive response,” said Antonio Gisbert, a spokesperson for the Yes on Measure 118 campaign behind the Oregon Rebate. “The secret sauce is that it’s a pretty clear concept.”

But Oregon’s measure has drawn significant bipartisan and business opposition. And even supporters of basic or guaranteed income programs worry that Oregon’s broad measure, if passed, would expose budgetary pitfalls that will doom its success and deter other states from starting their own programs.

Interest in basic or universal income programs has grown in recent years as policymakers and activists have sought ways to fight poverty by giving people regular cash payments. Guaranteed income programs generally focus on specific populations in need, and universal income programs give everyone the same amount of basic cash, regardless of income or other socioeconomic status. States such as Minnesota and Washington have considered statewide anti-poverty pilot programs to study the effects of paying people cash; more than 150 such programs or pilots have launched nationwide.

Many of the pilot programs target specific populations, including single mothers, homeless youth and those who’ve faced historic disadvantages. Advocates say that giving residents no-strings-attached cash improved people’s lives by allowing them to spend government and philanthropic aid as they see fit, often on housing, medical emergencies or other necessities.

Several cities, including New York and San Francisco, have piloted guaranteed income programs for the arts. In Seattle, it’s part of an effort to address growing affordability issues that continue to have an effect on the vibrancy of the city’s arts scene.

Silicon Valley entrepreneurs have been especially big proponents of universal income programs. Sam Altman, the CEO of OpenAI, the parent company of ChatGPT, has sponsored a study of such efforts, in part to allay concerns about the effect of artificial intelligence on employment. The study yielded largely positive results, with some caveats. The programs had no measurable effects on physical health, for example.

But those who oppose universal income programs argue they’re handouts that discourage people from working, or that they’re costly endeavors that apply mere Band-Aids on complex social issues and don’t do enough to address their systemic roots.

In a 2022 study, for example, researchers examined the financial, psychological and physical health effects of giving people one-time cash grants of up to $2,000. They concluded that the money did not significantly improve the recipients’ lives — in fact, it “made participants’ (unmet) needs more salient, which caused distress.”

But that was a one-time grant. Basic and guaranteed income programs got a boost from a 2019 experiment in which researchers observed improved financial stability and health among 125 people who lived in low-income neighborhoods in Stockton, California, and received $500 per month for two years. The idea got a big lift as well from entrepreneur Andrew Yang, who ran for president in 2020 on the “Freedom Dividend,” a universal basic income proposal that would have paid all American adults $1,000 a month.

The Oregon Measure

If the Oregon Rebate passes, the state would increase by 3% the minimum tax on corporations with in-state sales greater than $25 million to pay everyone the rebate, regardless of income. From the proceeds, most Oregon residents would receive an annual tax rebate, but some people with lower incomes could opt for a direct cash payment.

The state estimates 84% of people would choose a rebate via a refundable tax credit on personal income tax returns, reducing their tax bill. Rebates were estimated at $750 when proponents first began seeking signatures to put the issue to voters; a new state analysis estimates the rebate is likely to be as much as $1,160 in 2026 and $1,605 by 2027.

Despite the allure of cash, the ballot measure has met with widespread opposition, including from the Democratic governor, the legislative leadership of both parties, most of the state’s major labor unions and nearly all of its major business organizations. Gov. Tina Kotek told one news outlet, Willamette Week, that the proposal “would punch a huge hole in the state budget.”

It faces opposition as well from organizations that generally support guaranteed income programs and oppose regressive tax policies that fall unduly on people with lower incomes. One such group, Tax Fairness Oregon, called it “a hot mess.” The measure appeals to many of the principles they support, said the organization’s president, Jody Wiser, including increasing taxes on large businesses that use loopholes or tax shelters to avoid paying corporate taxes, and ensuring that people have enough money to live with dignity.

That’s where the common ground ends, though.

“If they had focused it towards helping people in need and come up with something that was fair amongst all businesses, that would be one thing,” Wiser said, pointing to how some large, privately held corporations obscure their incomes with sophisticated accounting. “But that’s not what they did.”

A coalition of business groups opposing the measure says it fears the rebate will drive up consumer costs far more than sales taxes would; Oregon does not currently have a retail sales tax. Because it’s a tax on gross receipts, businesses would pay whether they were making large or small profits or losing money, argues the organization, Defeat the Costly Tax on Sales. Grocery stores, which have low margins but high sales, would be hit especially hard, the group says. The coalition has raised more than $9 million to oppose the rebate.

It would “make Oregon businesses less competitive and drive up costs even higher for Oregon consumers,” Angela Wilhelms, president and CEO of the advocacy group Oregon Business & Industry, said in a statement.

Backlash and Support

Already, there’s a backlash against cash assistance programs. Several red states this year passed legislation banning cities or counties from creating basic income programs that provide direct cash payments to people with low incomes, arguing that they are handouts that disincentivize work. In Texas, the Republican attorney general sued to block Harris County from enacting a pilot program to pay $500 per month to 1,900 people with low incomes in Houston. Arizona’s and Wisconsin’s Democratic governors this year vetoed Republican-backed legislation that would have banned basic income programs.

Many in Oregon fear the proposed rebate could siphon away tax revenue from the state’s general fund, sabotaging other priorities, including innovative efforts to create guaranteed income programs that they say would more effectively target poverty by sending cash to the people who need the most assistance.

Oregon, along with local governments and philanthropies, has several ongoing guaranteed income pilots underway, said Daniel Hauser, deputy director of the Oregon Center for Public Policy, an advocacy group that works on inclusive state economic policies such as expanding child tax credits. Another statewide program in Oregon gives direct cash payments to homeless youth.

They’d like to see more such efforts, with focus on people who are going through particular economic hardships, Hauser said, “not a program that’s available to every Oregonian for the sake of being a resident.”

“We definitely think there’s a lot of room to increase taxes on corporations and high-income earners here in Oregon and around the world, but there’s only so much that a state can do,” Hauser said. “We want to make sure that we put every one of those dollars we can into the pockets of the families that are struggling.”

The group is also worried that the rebate could have unintended consequences, including affecting income eligibility used to calculate other benefits for people with low incomes, such as food stamps or housing assistance. Voters are “pretty mindful of the fact that someone has to pay for something,” Hauser said. “Given the magnitude of this measure, I think people are going to be wanting to dig a little deeper and wanting to better understand: Where’s this $1,600 coming from?”

The Oregon Rebate now has the backing of some Silicon Valley universal basic income advocates, including a $100,000 donation from Dylan Hirsch-Shell, a former Tesla engineer running for mayor of San Francisco.

The rebate idea got its start in 2018, when Gisbert was at a coffee shop in Eugene, Oregon, talking to a friend about how they wanted corporations to pay more in taxes. They found appeal in the concept of microloans, and later, the ideas in Yang’s presidential campaign. They thought there ought to be a way for Oregonians to receive a comparable benefit to the Alaska Permanent Fund Dividend. Since 1976 that fund has paid out a share of the state’s oil and gas tax and leasing proceeds directly to residents, regardless of income.

Their idea snowballed among their friends, drawing a diverse group of people with varied socioeconomic backgrounds, Gisbert said. It started so small, though, that they were unable to get the attention of lawmakers in their early days. Instead, they used the state’s initiative approach to get the rebate on the ballot; it was the form of direct democracy they had access to, he said. It is relatively easy to put citizen initiatives on the ballot in Oregon, one of 26 states that allows initiatives or referendums to change statutes or the constitution.

“Conceivably, we could live in a world where outsiders have a little bit more access to that power dynamic, but in fact, we don’t,” he said. “And that’s sort of OK; if we had been millionaires, we would’ve just called our state person and been like, ‘let’s have a meeting.’ And we’d be taken seriously. But in fact, we were just random people.”

Gisbert says that the money raised by the business-driven coalition that has formed in opposition to their proposal speaks volumes about who in the state doesn’t want to see universal income to succeed. But their argument for the measure also speaks for itself, he said, and voters will have their opportunity to be heard.

“Should big corporations start to pay their fair share in taxes? Yes. Awesome,” Gisbert said. “And when they do that, could you use about 1,600 bucks for yourself and every member of your household? Yeah. Fantastic. Vote yes.”