PORTLAND, Ore. — This month, voters in Multnomah County will be deciding whether to approve a new capital gains tax in order to fund free legal defense for renters facing eviction.
Measure 26-238, on the ballot in the May 16 special election, would levy an adjustable countywide capital gains tax, initially set at 0.75%. Funds raised from that tax would, after administrative expenses, support free legal representation for Multnomah County residents facing eviction.
"This ballot measure is part of the nationwide 'Right to Counsel' movement," said John Bethencourt, co-organizer behind the measure. "It's modeled after very successful measures all across the country that have shown when you provide free legal representation of tenants being taken to eviction court or at risk of displacement, in a surprising number of cases you can keep that tenant housed until they can be stabilized."
Without the disposable income to hire legal counsel, renters can easily get railroaded by landlords who do have that luxury — whatever the merits of the case.
At the forefront of the Right to Counsel movement in the U.S. is New York City. Voters there passed a law in 2017 that gave free access to legal counsel for lower-income renters facing eviction, paying for the program with taxpayer dollars.
A recent NYC report stated that 84% of tenants in eviction proceedings who had a lawyer provided through the Right to Counsel program avoided eviction.
But the program in New York has become a victim of its own success. It's so popular, and eviction battles there are so common, that it has struggled to bring in enough money to provide lawyers for everyone in need of them.
The cost
In Multnomah County, the funding issue has really become the rallying point for opposition to Measure 26-238.
Capital gains is a term for the profit that someone makes when selling certain things, like property, a home, stocks or mutual funds — even digital currency. The Multnomah County tax would start at 0.75%, but it would be adjustable and could go up or down.
Proponents such as Eviction Representation for All hope the new tax will raise between $12 million and $15 million per year.
The federal government levies a capital gains tax on Americans as well. But unlike the tax contained in Measure 26-238, it has limits. For instance, the federal tax doesn't count the first $500,000 of profit you make when selling your home as a married couple. It also has limits based on income level.
Measure 26-238 has no such explicit exemption. As written, it would tax everyone on every bit of capital gains they get, no matter their income level.
But Bethencourt argues that, in practice, a similar exemption to the federal one could apply to the Multnomah capital gains tax.
"We refer to the federal tax calculations," he said, "We say capital gains as defined by the Internal Revenue Code. And that's just the way people write ballot measures. We wrote it in the style of other successful ballot measures like the Clean Energy Fund which are written in brief, high-level language outlining the parameters of the program and the key features."
That could mean that it will all depend on how Multnomah County interprets the measure if passed.
Opponents like the Portland Business Alliance say that the tax would have a dramatic impact on anyone, at any income level, trying to sell their home — which could then end up costing buyers as well.
"We got involved because here's a proposal that asks voters to raise taxes, and in large part on housing, in the middle of a housing crisis," said Andrew Hoan, president and CEO of the PBA. "It's our responsibility to stand up to proposals like this that may be well intended to help get tenants representation, but that impact the very thing that is driving our region to the point of unaffordability."
Those who oppose the measure say it would hit homeowners who have seen their nest egg grow in their homes during fast increases in value the past several years.
Certainly, a lot of people subject to capital gains tax are likely to be wealthy, because it's based on assets. But for some homeowners looking to sell, the value of their home is the only wealth they've got — and some retirees subsist on retirement plans that would be subject to a capital gains tax.
And then there's the matter of the overall tax burden in Multnomah County. Voters in 2020 already approved big income tax measures in Multnomah County that support preschool for all, not to mention the Metro tax for homeless services.
The next year, more than 12,000 people moved out of Multnomah County. It'd be reductive to chalk that up to tax burden entirely, but it could certainly be attributed to a disconnect between tax burden and perceived outcomes.
Several groups have lined up in support of Measure 26-238, including the Urban League of Portland, the Democratic Party of Multnomah County and two major labor unions.
Voicing opposition are the Black Business Association of Oregon, Congressman Earl Blumenauer, Metro President Lynn Ann Peterson, Portland Mayor Ted Wheeler and two county commissioners, among others.
The odds
So, in a divided environment like this, what are the chances of this measure passing? The Story's Pat Dooris dialed up pollster John Horvick from DHM Research.
Late last year, DHM did a survey to figure out how Multnomah County voters were feeling about the measure. At the time, 40% were in favor versus 47% opposed.
"So 40% — if you sort of do a lot of campaign work and public opinion work at the beginning of a process — is quite low," Horvick said. "Typically campaigns want to start with about 60% support for their issue because its not unusual, particularly when a contest is contested, for support to erode as you get closer to Election Day. Now, that said, if we look back in history, voters in Multnomah County have been very generous when it comes to tax measures."
Traditionally, Portland voters are happy to take on a new tax for a good cause. The last time voters said "no" to a new tax was for a Portland school bond in 2011. Voters approved the measure the very next year.
But Horvick said that the Multnomah County capital gains tax is running into a growing sentiment of tax frustration. Many in the county feel that they are already paying too much in taxes for too little in the way of service. And this tax is of a sort that voters aren't accustomed to.
"This is a new mechanism. So we're not only asking voters to say yes to a tax measure, we're asking them to say yes to a tax measure they've never even considered before locally," he said. "Another is that this is to support a group of individuals who don't represent the majority of voters in Multnomah County. That is, it's meant to protect renters — not only renters, but renters who are at risk of losing their housing.
"The vast majority of voters in this May special election are going to be homeowners. They're gonna be older. They're not gonna be people who for the most part are gonna feel like they're directly benefitting from this. So, the other piece of this is the proponents are not nearly as well organized or well resourced as the opponents of this."
Overall, Horvick said, turnout for this election could be low — which is often the case for these May special elections. That could hurt Measure 26-238, since it's typically younger voters, more likely to be renters, who are absent in low turnout elections.
Multnomah County said Friday that every registered voter in the county should have their ballot by now following a misprint issue that delayed mailing, although it may still be sitting in the mailbox. Election Day is Tuesday, May 16, so ballots need to be mailed or dropped at a ballot box by 8 p.m. that day.