A Bold Move Toward Universal Basic Income, or a Missed Opportunity? How Important is Oregon's Measure 118
Voters will soon decide the fate of a measure that attempts to reduce poverty through direct payments, paid for by taxing less than 2% of businesses operating in the state.
The concept of Universal Basic Income, or UBI, has been floated as a possible solution to the rising tide of inequality in our society in recent years. Most versions of the UBI concept, such as those floated by 2020 presidential candidate Andrew Yang, would provide a guaranteed, no-strings-attached lump sum of cash funded from tax revenues. Now Oregonians are weeks away from potentially enacting a similar idea in the form of Measure 118.
Certainly, most Americans agree that our government should be making more of an effort to address stagnating wages1, surging homelessness2, skyrocketing housing costs3, and numerous other economic woes4. And UBI could definitely help - at least it seemed to improve things for many low-income families when the federal government ran several temporary UBI programs in the form of COVID-19 stimulus checks, expanded Unemployment Insurance, and the expanded Child Tax Credit. The checks and unemployment benefits kept more than 13 million Americans out of poverty, according to Columbia University’s Center on Poverty and Social Policy.
Measure 118 is one of the most important economic ballot measures that has come before voters in the United States in recent years, and it has the potential to make a meaningful difference in the lives of low-income individuals. It isn’t a perfect proposal, but it is a bold response to years of legislative inaction on economic inequality.
How does Measure 118 work?
Measure 118 would put a 3% gross receipts tax on Oregon sales exceeding $25 million, dramatically increasing the existing corporate minimum tax rate for large corporations. While the current corporate minimum tax paid by these corporations goes into the general fund, revenue from the increased minimum tax would specifically go toward the rebate. This money would be evenly distributed to eligible Oregonians, defined as those residing in the state for at least 200 days in a calendar year. This includes children, making Measure 118 especially helpful for struggling families. If individuals decline or fail to claim their share of the rebate, the money would be directed to “services for senior citizens, health care, public early childhood education and public kindergarten through grade 12 education” (Full text of the ballot measure from the Oregon Secretary of State [PDF]).
The funds would be available most easily as a tax rebate, though the measure also provides a process allowing individuals to request the payment at any time. The ballot measure also states that the payments are not taxable income and should not affect public benefits, and backs this up with a requirement that individuals be reimbursed if their benefits are reduced or eliminated due to the rebate.
How much would each person get?
The home page of Oregon Rebate states that their measure would pay “$1,600 for every Oregonian, every year.” However, the actual amount it could pay out is complicated primarily by the measure’s Hold Harmless provision, which states that Measure 118 rebate payments should not reduce or disqualify individuals from need-based benefit programs such as food stamps and Medicaid. The measure directs the Oregon Department of Human Services to seek out waivers from the federal government where necessary to make this happen, but this approval is uncertain. If individual benefits are reduced or eliminated due to the rebate, the measure requires twice-a-year payments to replace the lost benefits. While this would be relatively straightforward for programs that pay a monetary value where the money could be replaced dollar-for-dollar, replacing benefits lost in the form of medical care or housing vouchers could be much more complicated.
According to a Sept. 23rd report from Oregon’s Legislative Revenue Office [PDF], the median 2026 rebate could land between $1,035 and $1,286, and the 2027 rebate could be between $1,442 and $1,790. The projections vary primarily based on how much the Hold Harmless provision will cost, as demonstrated in this chart from the LRO report.
What about businesses?
Oregon’s existing corporate tax structure includes a corporate minimum tax based on Oregon sales that scales up from $150 to $100,000. It also includes a 6.6% income tax on the first $1 million of income and a 7.6% tax on income over $1 million. Businesses are required to pay the higher of the two taxes. Additionally, all businesses in Oregon with over $1 million in gross receipts are required to pay a .57% Corporate Activity Tax that was passed by the legislature in 2019 to provide a stable, ongoing source of funding for K-12 public education.
Because Measure 118’s funding mechanism increases the corporate minimum tax by applying the 3% gross receipts tax to total sales over $25 million, it will effectively mean that many big businesses will pay the corporate minimum tax plus Measure 118 tax instead of the corporate income tax (CAT will still apply in addition to that). Some funds paid by large corporations that would have gone into the general fund under the existing tax structure will instead go toward the rebate.
How does Measure 118 compare to the Alaska Permanent Fund?
The only state that currently has a guaranteed income program is Alaska. The Alaska Permanent Fund Dividend distributes a portion of the state’s oil revenue to residents each year. The program has noticeably decreased poverty in the state especially among indigenous Alaskans, according to a recent study published in the journal Poverty & Public Policy. Like Measure 118, each resident receives an equal dividend regardless of age or income. Unlike Measure 118, though, the payout is tied to resource extraction rather than a tax on big businesses. A rough average amount of the dividend is around $1,600, though it fluctuates based on the fund’s earnings.
One crucial difference is that the APF takes the money it collects and invests a portion of it, creating a long-term fund that the state can draw upon when natural resource extraction revenue wanes. Measure 118 would instead pay out all of its revenue. Another difference is the Alaska Permanent Fund provides less robust protections for public benefits: the money counts as income for many benefit programs like SNAP and housing vouchers. It is excluded from calculations for Medicaid eligibility, however - this means that Oregon could potentially follow a similar approach with federal approval. Alaska also repays Social Security for any SSI over-payments resulting from the APF dividend, so Oregon could try to make a similar arrangement.
What could Measure 118 mean for Oregon’s future?
Many of Oregon’s public officials have come out as opposed to Measure 118, largely arguing that big businesses might choose not to do business in the state to avoid the increased tax burden. They have also argued that the Hold Harmless provision would create too many administrative complexities and challenges, and that the diversion of some funds away from the general fund would hurt essential public services like education and healthcare.
As voters go to the mailbox, though, it is important to weigh these concerns against the potential benefits. Measure 118 could provide financial relief to millions of Oregonians, which could help reduce economic insecurity. It could lift children and families out of poverty. And it would pay for this with a tax that would only apply to less than 2% of businesses in Oregon (KGW). It’s not a perfect proposal, but it is a bold attempt at taxing big businesses to help the broader population.
Real wages, adjusted for inflation, in the US have stagnated for several decades, and purchasing power remains roughly the same as it was in the late 1970s despite more than a 60% increase in productivity over the same time span per Pew Research Center and the Economic Policy Institute.
Homelessness increased by 12 percent in the United States between 2022 and 2023, with an estimated 653,100 people experiencing homelessness per the Department of Housing and Urban Development’s annual Homeless Assessment Report [PDF].
From Q1 2009 to Q2 2024, the median US home price increased by 85%, from $208,400 to $412,300 (Federal Reserve Economic Data). The hourly wage required to afford a modest one-bedroom rental unit is $26.74 per hour, a pay rate that is two to three times the minimum wage in 40 states (National Low Income Housing Coalition [PDF], Department of Labor Wage and Hour Division).
The cost of higher education has burdened Americans with $1.7 trillion in student loans (Federal Reserve). Healthcare costs have spiraled and far outpace inflation and wage growth (Center for Medicare and Medicaid Services [PDF]). Inflation hit its highest point in more than four decades (Bureau of Labor Statistics [PDF]).