About Steve Buckstein

Senior Policy Analyst and founder.

Testimony Before the House Committee on Revenue in Opposition to Tobacco and Inhalant Nicotine Tax Bills

To: Chair Barnhart and members of the House Committee on Revenue

From: Steve Buckstein, Senior Policy Analyst and Founder of Cascade Policy Institute, a Portland-based non-partisan, non-profit public policy research organization

Re: Tobacco taxes and inhalant nicotine taxes proposed in
HB 2037, HB 2056, HB 2062, HB 2084, HB 2119, HB 2662, and HB 3178

Why the state should not depend on increased sin taxes

  • Oregon’s addiction to tobacco/nicotine revenues will only grow if we become more dependent on them to fund new or existing programs.
  • Taxes on alcohol and tobacco are frequently justified as a means of discouraging “unhealthy” behavior. But this objective quickly gives way to a different one: raising revenue. This creates a “moral hazard” problem: sin taxes cannot simultaneously both discourage consumption and raise more revenue. For one to succeed, the other must fail.
  • As cigarette smoking continues to decline, tobacco taxes will continue to shrink, punching one more hole in future state budgets.

The regressivity of Sin Taxes

Paying for any state programs by taxing smokers may make some program recipients better off, but it will also make smokers and their families worse off.  As you may know:

  • Cigarette smoking adults are more likely to be uninsured than non-smoking adults.
  • Cigarette smokers are in poorer physical condition than non-smokers.
  • Cigarette smokers generally have lower incomes and less formal education than non-smokers.
  • Cigarette smokers are more likely to be unemployed or unemployable than non-smokers.

Policy option:

Currently, less than eight percent of Oregon tobacco taxes are used for the Tobacco Use Reduction Program. Funding other state programs through cigarette, tobacco and/or nicotine taxes is very regressive, targeting less educated, lower income and sicker Oregonians. If anything, these taxes should be reduced, not increased.

Parental Choice Champion Betsy DeVos Confirmed as U.S. Secretary of Education

By Steve Buckstein

Opponents of Betsy DeVos tried everything they could to keep her from becoming U.S. Secretary of Education. In the end, she was approved by the Senate on Tuesday with Vice President Pence breaking a 50-50 tie vote.

In addition to arguments that she is wealthy (which she is) and that she never attended public schools (which she didn’t), opponents feigned shock that she had the temerity to argue that educating children takes precedence over protecting and funding public schools that may not meet their needs.

Perhaps her opponents’ biggest error is thinking that private schools are not providing “public education.” But they are. Many Americans recognize that meeting the educational needs of children trumps meeting the financial needs of the adults who work in public school buildings.

Public education means educating the public—or it should. Students don’t suddenly stop being part of the public just because their parents believe they will be better educated in other than their local public school building.

Betsy DeVos believes that public funding of education shouldn’t be limited to schools dominated by public teachers unions. She may not be a friend of those unions, but she is a friend of children who may need those funds to help them learn somewhere else. She has, and will advocate for school choice programs including charters, vouchers, and Education Savings Accounts that allow those children to take their public education funds to the schools they and their families—not the government—choose.


Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

The Past, Present, and Future of School Choice in Oregon

By Steve Buckstein

The vast majority of Oregonians attended public schools assigned to them based on their ZIP codes. Yet, everyone has friends or relatives who made different choices such as private, religious, and home schooling.

Few know, however, that these other choices were almost eliminated in the 1920s. Bigotry was strong across America then, and not only against Blacks. The Ku Klux Klan and others placed a measure on Oregon’s 1922 ballot that would have required children to attend only schools run by the government. The Oregon Compulsory Education Act was defended as “a “precautionary measure against the moral pestilence of paupers, vagabonds, and possibly convicts.”

Approved by a narrow margin, the measure was challenged and overturned by a unanimous U.S. Supreme Court decision in 1925. In its ruling the Court said “the fundamental theory of liberty upon which all governments in this Union repose excludes any general power of the State to standardize its children by forcing them to accept instruction from public teachers only. The child is not the mere creature of the State; those who nurture him and direct his destiny have the right, coupled with the high duty, to recognize and prepare him for additional obligations.”

So, while choices other than public schools remained available, most families have been unable to afford public school taxes and private school tuition at the same time. This reality caused a small group, including myself, to place a citizen initiative on Oregon’s ballot in 1990. Measure 11 would have provided refundable tax credits to every K-12 student in the state, which they could use to attend any public, private, religious, or home school of their choice. No state had voted on such a sweeping reform before, and we felt it was time for Oregon to lead the way.

On election night that November we came up short, with only about one third of the vote. That didn’t surprise us, because school choice was a new concept to most people, and it was easy for our opponents to scare voters into saying No. Before the votes had even been tallied, we began thinking about how we could move our school choice agenda forward in the future. We decided that Oregon needed a free-market think tank to advocate for school choice as well as other limited government ideas. We incorporated Cascade Policy Institute two months later. In the 25 years that have now passed some significant progress on the school choice front has been made.

We worked hard to introduce the charter school concept in the state in the mid-1990s. By 1999 the Oregon legislature passed a charter school bill that now allows more than 120 public charter schools to operate across the state.

Also in 1999 we evolved from just talking about school choice to actually providing choice to hundreds of low-income kids in the Portland area through our Children’s Scholarship Fund program. We initially raised $1 million of private money that was matched by $1 million nationally to provide partial scholarships to over 500 students for four years at the schools of their choice. The fact that over 6,600 children applied for those 500 slots demonstrated that the demand for school choice is great in Oregon. We can’t help them all, so we continue to advocate for broader programs that will.

In 2011 three school choice bills passed as part of an education reform package, including expansion of online charter schools, more options to sponsor new charter schools, and open enrollment between public school districts.

Over these past twenty five years Cascade and others have brought a number of national speakers to the state talking about the benefits of school choice elsewhere, including some 61 privately or publicly funded scholarship programs, charter schools, education tax credits, vouchers, and Education Savings Accounts (ESAs).

In 2014, Cascade proposed a limited Education Savings Account bill to help disabled, foster, and low-income children. ESAs allow students to take some or all of the money the state would spend on them in a public school and put it on a restricted use debit card. They can fund a wide variety of approved educational options, such as private school, individual tutoring, and distance learning. Any money not used in a given year can be rolled over to spend on educational expenses in the future, even into college.

Earlier tax credit and voucher programs are now seen as the rotary-dial telephones of the school choice movement. ESAs, with their expansive array of options and their ability to hold costs down as students plan and save for the future are seen as the smartphones of the movement— smartphones with virtually unlimited apps to help children learn in their own unique ways.

This year, Cascade is promoting a broad ESA proposal in the Oregon legislature. Senate Bill 437, and other bills that may emerge, are designed to enhance school choice for everyone. In the future, our mission—and yours if you choose to accept it—will be to help our fellow Oregonians understand and support what many now call the new civil rights issue in America: the right of every child, no matter where they live or their parents’ financial means, to reach their own potential by making their own educational choices affordable. Until this right is achieved, too many children will remain trapped in schools assigned to them by their ZIP code that fail to meet their needs.

We won’t stop advocating for school choice until every child has the real choices they deserve. We appreciate the help of everyone who shares this vision. It can’t become a reality too soon.


Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s free market public policy research organization. 

Bad Consequences of Public Policies Aren’t Really “Unintended,” Just “Unacknowledged”

By Steve Buckstein

Decades of research and experience tell us that raising the government-imposed minimum wage results in fewer younger and lower-skilled individuals being hired, and in some of them losing jobs they previously held at lower wages.*

Decades of research and experience also tell us that requiring landlords to charge lower rent than market conditions dictate results in fewer housing units being built, making housing shortages worse and raising housing costs in areas not subject to rent controls.**

During last year’s minimum wage debate in Oregon, pointing out the negative consequences was not enough to stop the legislature from imposing significant wage increases. Likewise, this year the legislature may allow local jurisdictions to impose rent controls even though opponents will surely point out the negative consequences of this policy also.

It now seems obvious what is happening. Supporters of minimum wage increases and rent control aren’t blind to their negative consequences; they simply refuse to acknowledge them because the political benefits outweigh the real costs imposed on those forced to endure them.

The harm done by minimum wage increases and rent control is so obvious that we should probably stop saying that their negative consequences are “unintended.”  Rather, we should say that their negative consequences are “unacknowledged” because their supporters refuse to admit that they exist.

* Making Youth Unemployment Worse, Randall Pozdena and Steve Buckstein, Cascade Policy Institute, December 2016

** The Rent Is Too Damn High! — Why Rent Control Won’t Help, Steve Buckstein, Cascade Policy Institute, September 2016


Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

Now What?

By Steve Buckstein

Here at Cascade Policy Institute, as a nonprofit, nonpartisan think tank we don’t support or oppose political candidates. But we aren’t shy about telling candidates and elected officials what we think about their policies.

Now that this especially contentious election is finally over, you’re probably happy about some of the results and unhappy about others. But even if you got what, or whom, you wanted, you might think about some timeless insights from two discerning historical figures.

The first insight comes from Eric Hoffer, known as the longshoreman philosopher. In his 1951 book The True Believer, Hoffer noted:

“A man is likely to mind his own business when it is worth minding. When it is not, he takes his mind off his own meaningless affairs by minding other people’s business.”

The second insight comes from American statesman Daniel Webster, who in the early 1800’s said:

“There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters.”

Even if the worst happened on election night in your opinion, remember that America has survived as a free and strong nation since declaring our Independence in 1776. In those 240 years we’ve benefited from some great public servants, and suffered some terrible ones. But we’ve always survived and generally prospered, and odds are that we will this time too.

Does Oregon Rank Dead Last in Corporate Taxes? NO

By Steve Buckstein

Trying to sell voters on the largest tax increase in Oregon history, Measure 97 proponents claim that “Oregon ranks dead last in corporate taxes.” But the nation’s leading independent tax policy research organization, The Tax Foundation, says this claim is misleading. It looked at three ways to rate corporate taxes and found:

  • Oregon’s top marginal corporate income tax rate is the 18th highest in the nation.
  • On a revenue per capita basis, Oregon’s corporate income tax is the 28th highest.
  • The Foundation’s State Business Tax Climate Index ranks Oregon 37th nationally for overall corporate income tax structure.

The “dead last” corporate tax claim relies on two national reports (AEGCOST) that look at total business tax burdens, not just the tax burdens of large C corporations, the only entities directly targeted by Measure 97. Even so, both these reports make clear that they rate Oregon’s business tax burden low not because corporate taxes are low, but rather because Oregon doesn’t have a sales tax.

As the COST report notes, “If sales tax revenue is excluded…[Oregon] moves from the lowest…to the 20th-lowest rate.”

Misleading voters about Oregon’s corporate tax structure may simply be a tactic to keep us from focusing on the fact that Measure 97 is really a hidden sales tax on steroids that will hit every Oregonian. When we realize that, Measure 97 should suffer the same fate as every other statewide sales tax measure—defeat.

Read much more about Measure 97 and why you should vote against it on Cascade’s Measure 97 webpage.

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“The Rent Is Too Damn High!” — Why Rent Control Won’t Help

Once again, Portland led the nation this July with its home prices rising 12.4 percent year-over-year versus the national average of just 5.0 percent. As of April, Portland remained the 12th most expensive rental market in the nation. These numbers are not unrelated. Housing prices are often related to what units can be built for, whether they are single-family homes or multifamily apartment houses.

Whatever the causes of rising rents in Portland and elsewhere, the political fix bubbling to the surface not only won’t help most people afford housing, it likely will make the situation worse. That political fix goes by the name of rent control.

Last year, Willamette Week published an informative and entertaining piece entitled “The Five Myths About Portland Apartments.” In response to Myth 3, which is that rent control is the answer, Jerry Johnson of Portland real-estate consulting firm Johnson Economics noted:

“Rent control is an Econ 101-level policy disaster. If you happen to get one of the rent-controlled units, good for you. But it’s basically a lottery of who wins and who loses.”

Apparently unaware of the policy disaster that rent control forebodes, Oregon Speaker of the House Tina Kotek recently proposed allowing localities to enact their own rent control programs. She also wants to end so-called “no-cause” evictions and to ban rent increases above a “reasonable” percentage “for the foreseeable future.” In her prepared remarks she said, “Our housing crisis is a man-made emergency that demands bold action,” and, “We have privileged the right to make a profit on property far above the universal human right to safe and stable housing.”

Our housing crisis may very well be a man-made emergency. If so, the Speaker has misdiagnosed the cause, which has more to do with Oregon’s “man-made” restrictive land use laws than it does greedy landlords. And, the “bold action” she proposes likely will make the situation worse.

Economists of virtually every political stripe reject rent control as a viable way to improve housing affordability. They recognize what too few of our political leaders and voters recognize: namely, that controlling the price of a commodity, in this case rental housing, actually harms the very people the policy is designed to help. They know from economic theory and observation over many decades The High Cost of Rent Control. They know that it misallocates housing resources, heightens tensions between landlords and tenants, stifles private investment in affordable housing, and leads to deterioration and eventual abandonment of the very housing stock that middle- and lower-income tenants wanted it to protect for them at affordable prices.

Three local economists were quick to respond to Speaker Kotek’s suggestions:

“Rent control just sends us a couple hundred miles closer to San Francisco in terms of housing policy,” said Gerard Mildner, director of the Center for Real Estate at Portland State University.

“It’s almost textbook that any form of rent control ultimately harms consumers, as well as landlords,” said Eric Fruits, an economist and editor of Portland State University’s Center for Real Estate quarterly reports. “It may benefit some in the short term, but in the longer term, there will be fewer units available to rent, which will only make matters worse.” Instead, Fruits said, the free market should be allowed to work, with higher prices sending signals to developers that more units are needed.

“The demand for urban living is increasing and cities are not increasing the supply nearly fast enough,” Portland economist Joe Cortright said. “The only solution is to build new housing.”

As an Oregonian editorial then pointed out:

“Among other things, limiting rent growth dampens future investment in housing, inflates rents for unregulated units and discourages residents who secure rent-controlled units from moving, even when it’s in their best interest.”

In a lively discussion on social media following Speaker Kotek’s pronouncements, one person responded to her call for an end to “no-cause” evictions:

“No cause eviction benefits good tenants. When the bad guys move in, they threaten the good tenants who are afraid to testify about their behavior. The good tenants become prisoners in their apartments while the bad guys run wild. A landlord’s only defense is to become more restrictive on who they will rent to, therefore decreasing options for all renters.”

Even self-proclaimed “progressive” Portland city commissioner, Steve Novick, notes:

“…most economists say rent control has unintended consequences, including a decline in the production of new rental housing.”

While this is true, in “progressive” Portland and in the state Capitol economic laws are often trumped by political laws that make people feel better for a while, until economic reality rears its ugly head. Of course by then those who passed the laws have often moved on.

Accountability is rarely a part of the political process, which may be why it so often leads to unintended consequences that harm the very people the politicians were trying to help. Unfortunately, we may be destined to repeat this process again as rent control lurches onto the 2017 legislative agenda.


* Political activist and frequent candidate Jimmy McMillan memorably used “The Rent Is Too Damn High!” as his main campaign issue, slogan, and the name of his political party during his campaigns, including the 2010 New York gubernatorial election.

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Twenty-Five Years Litigating for Liberty

How many attorneys do you know who make their living defending liberty? Well, 43 attorneys work full-time at the national public interest law firm Institute for Justice. They protect school choice, economic liberty, the First Amendment, and private property. Supported by generous donors, the Institute for Justice never charges its clients.

Founded 25 years ago, the Institute for Justice has litigated over 200 cases, including five before the U.S. Supreme Court, where it won four times. The fifth case led to the infamous Kelo decision, where the Court unfortunately seemed to forget that private property cannot be taken through eminent domain for a “public purpose,” but only for a “public use.”

This year, Arizona Governor Doug Ducey appointed Institute for Justice co-founder Clint Bolick to the state Supreme Court, saying that “Clint is nationally renowned and respected as a constitutional law scholar and as a champion of liberty.”

It is fitting on this 25th Anniversary of Clint Bolick’s Institute for Justice that Oregon’s free-market think tank Cascade Policy Institute has chosen him as the Keynote Speaker at our 25th Anniversary Dinner on October 20. There, Justice Bolick will talk about how important defending personal and economic liberty has been—and still is in his new role on the Court. You won’t want to miss his inspiring talk.

For full details and to RSVP, go to CascadePolicy.org/25.

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Improve Education Outcomes Through Education Savings Accounts, Not Measure 97’s Hidden Sales Tax

On the third day of the new school year at Portland’s Madison High School, Governor Kate Brown spoke about her goal to improve educational outcomes for all students. She bemoaned the fact that at 74%, Oregon has one of the lowest high school graduation rates in the country, and then she noted that “For me this is a very personal issue”:

“My stepson blew out of one of the local area high schools a few years ago. We were very fortunate. We had the resources to provide him with another educational opportunity, but not all families do. That’s why it’s absolutely imperative that we work together to improve Oregon’s high school graduation rates.”*

So how does Governor Brown propose to assist families that don’t have the resources hers had to help their children achieve educational success? Apparently, by supporting Measure 97 on the November ballot, which would be the biggest tax increase in Oregon’s history.

In reality, Measure 97 is a sales tax hidden behind the façade of being a tax on big business. Its passage will actually make it harder for many of the families the Governor wants to help, in the questionable hope that the revenue it generates would be spent properly to give their kids a better chance at graduation from the same schools that have failed so many in the past.

Measure 97 will not only act as a consumption tax on many of the goods and services Oregon families buy every day, but it also will reduce private sector employment opportunities as more than $3 billion are siphoned out of the private sector into the state general fund each year. From there, all this money—which is about what a six-percent retail sales tax would produce—may or may not be spent in ways that would give struggling families the same opportunities that the Governor’s family had when her stepson needed help.

Rather than ask voters to take a $30 billion gamble over the next ten years on a tax measure that may not show any positive economic or educational results for Oregon families, the Governor and voters should consider another way to provide all families with the resources they need to give their children the educational opportunities they deserve. And, this other way will not raise anyone’s taxes, and it will not reduce anyone’s job prospects.

This other way is school choice. Governor Brown’s predecessor, John Kitzhaber, took a major step toward this other way when he signed Oregon’s public charter school law in 1999 that currently allows more than 30,000 students to attend some 127 charter schools for educational opportunities they otherwise would have been denied. All without costing taxpayers or the public school system one additional dime.

Oregon is one of forty-three states and the District of Columbia that offer public K-12 charter school opportunities to their families. Now, the newest wave in the school choice movement is offering Education Savings Accounts in five states, and that number is sure to grow.

Education Savings Accounts, or ESAs, are not a college savings plan. Rather, if families decide the public schools their children are assigned to are not meeting their needs, they can leave those schools and instead receive money from the state to pay for approved alternative education options and expenses. Parents can spend the funds on private school tuition, individual courses at public schools, tutoring, online learning, textbooks, educational therapies, and other education-related services and products. They can use a combination of these services based on what they think would best meet their child’s learning needs.

Each eligible child is able to draw from his or her own personal Education Savings Account maintained by the state and funded by most, but not all, of the money that otherwise would have been sent to the local school district. When properly structured, ESAs require no new taxes and are not a financial burden on the state or local public school districts. They simply allow money already allocated for public education to be used in ways individual families choose, instead of in ways dictated by the ZIP code students happen to live in.

In an improvement over earlier school choice programs such as vouchers, ESAs let families spend only what they want to each year, and save or rollover the balance toward future educational needs. If not all the money in an ESA is spent by the time a student graduates from high school, the remaining funds may be used to help cover his or her higher education costs.

So, let’s not ask taxpayers to gamble that our troubled public schools will somehow get it right this time if we simply give them enough new money out of our pockets with the hidden sales tax in Measure 97. Instead, let’s ask our legislators in Salem to explore a new, truly innovative way to improve educational outcomes for each individual student with personal Education Savings Accounts.


* Governor Brown’s complete remarks at Madison High School were recorded and can be heard on this KXL radio episode of Beyond the Headlines in the first segment of about seven minutes at https://soundcloud.com/kxl-beyond-the-headlines/week-of-8-28-16-episode-130

No to Hidden Sales Tax on Steriods 97

Policy Picnic – September 21, 2016

Please join us for our monthly Policy Picnic led by Cascade’s Senior Policy Analyst and Founder, Steve Buckstein


Topic:  Measure 97 – A Hidden Sales Tax on Steroids

Description:

Measure 97 on Oregon’s November 2016 ballot would impose the biggest tax increase in Oregon history: a sales tax on steroids, hidden behind the facade of being a $3 billion annual Gross Receipts Tax on business. It will raise taxes by $600 per capita.

Contrary to claims that it is only a tax on big corporations, the nonpartisan Legislative Revenue Office found that it will act largely as a consumption tax on Oregonians, with lower-income households being hurt the most. Prior to receiving its ballot measure number, Measure 97 was known as Initiative Petition 28.

Steve Buckstein will explain what the measure really does and what it means for you, your family, or your business. Bring your friends and coworkers!

Admission is free, but reservations are required due to space limitations. You are welcome to bring your own lunch; light refreshments will be served.

Please click here to reserve your free tickets.

Cascade’s Policy Picnics are generously sponsored by Dumas Law Group, LLC.

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