Elspeth McCANN, Petitioner, v. Ellen ROSENBLUM, Attorney General, State of Oregon, Respondent. Dan HARMON, Petitioner, v. Ellen ROSENBLUM, Attorney General, State of Oregon, Respondent.
SC S061799 (Control)
(SC S061801)
Supreme Court of Oregon
February 14, 2014
354 Or 701 | 320 P3d 548
On petitions to review ballot title filed November 7, considered and under advisement on December 17, 2013, ballot title referred to Attorney General for modification January 30, modified ballot title certified February 14, 2014 (354 Or 839)
Jill Gibson Odell, Gibson Law Firm, LLC, Portland, filed the petition for review for petitioner Harmon.
Judy C. Lucas, Senior Assistant Attorney General, Salem, filed the answering memorandum for respondent.
KISTLER, J.
Petitioners McCann and Harmon seek review of the Attorney General‘s certified ballot title for Initiative Petition 30 (2014). See
In Oregon, corporations must pay the higher of either a tax on their “taxable income” or a business minimum tax. See
Except for S corporations, the minimum tax that a corporation owes will vary depending on the corporation‘s total Oregon sales.
Initiative Petition 30 (IP 30), if adopted, would change two aspects of the minimum tax. First, it would eliminate the current cap on minimum taxes by providing that, if a corporation has more than $50 million in Oregon sales, it would owe a minimum tax of $50,000 plus two percent of all Oregon sales in excess of $50 million.3 IP 30 would thus increase the minimum tax for all corporations with more than $50 million in Oregon sales. Second, IP 30 would reduce by half the minimum tax for corporations with Oregon sales between $500,000 and $9,999,999.
IP 30 also would eliminate any tax on profits for corporations with less than $10 million in Oregon sales. If IP 30 were adopted, those corporations would pay only a reduced minimum tax, no matter how much they earned in profits on Oregon sales and even if they would have paid a greater tax on their profits under current law.
The Attorney General certified the following ballot title:
“Modifies annual minimum tax for some corporations, depending on the amount of corporation‘s Oregon sales
“Result of ‘Yes’ Vote: ‘Yes’ vote will decrease annual minimum tax for some corporations, increase annual minimum tax for some corporations, depending on amount of corporation‘s sales in Oregon.
“Result of ‘No’ Vote: ‘No’ vote retains current law, does not change amounts of minimum tax for corporations that are
based on amount of corporation‘s sales made in Oregon. “Summary: Currently, each corporation or affiliated group of corporations filing a tax return under
ORS 317.710 must pay an annual minimum tax; minimum tax amount increases based on the level of the corporation‘s sales in Oregon. Measure decreases the minimum tax for corporations with Oregon sales between $500,000 and $9,999,999. Measure modifies minimum tax for corporations with Oregon sales over $50 million by requiring payment of $50,000 plus 2% of the excess of Oregon sales over $50 million. Eliminates current cap of $100,000 on tax. Corporations with taxable income less than $10 million shall pay minimum tax on sales rather than tax on taxable income. Amendment applies to tax years beginning on/after January 1, 2015. Other provisions.”
Petitioner McCann challenges the caption, the “yes” and “no” vote result statements, and the summary.4 We begin with McCann‘s challenge to the caption. She argues that the caption does not reasonably identify the subject matter, because it omits significant information, such as the elimination of the minimum-tax cap and the exemption from the profits tax for lower-grossing corporations. She also contends that, in the caption as well as throughout, the ballot title uses misleading language. According to McCann, the word “modifies” is underinclusive and impermissibly vague. In her view, the initiative does more than modify: it increases tax burdens for corporations with more than $50 million in Oregon sales and decreases those burdens for corporations with less than $10 million in Oregon sales. Furthermore, she argues, the term “some corporations” is misleading, because it implies that tax burdens will vary according to the type of corporation.
In response, the Attorney General agrees that the caption omits some information but contends that the omitted information is not significant. In the Attorney General‘s view, the ballot title‘s caption must inform voters of the “main subject” of the initiative, not subsidiary details. Subsidiary details, the Attorney General reasons, include whether IP 30 increases or decreases the minimum tax, removes a cap on that tax, and exempts corporations with lower Oregon sales from paying a tax on their profits. The Attorney General also argues that “modifies” is not misleading or vague, because it puts voters on notice of IP 30‘s “main subject,” which is to change minimum tax burdens for some corporations.
IP 30 makes three important changes to Oregon tax law. First, it exempts corporations with less than $10 million in Oregon sales from having to pay any tax on their profits. Second, it reduces by half the minimum tax for corporations with more than $500,000 but less than $10 million in Oregon sales. The result of those first two changes is to reduce the excise taxes paid by corporations with under $10 million in Oregon sales. Third, IP 30 removes the cap on the minimum
As noted, the certified caption provides: “Modifies annual minimum tax for some corporations, depending on the amount of corporation‘s Oregon sales.” That text describes only one general aspect (modification) of one change (altering minimum tax liabilities) that IP 30 would make. Not only does the caption omit a significant change that the measure would effect (eliminating profits taxes for lower-grossing corporations), but by referring only to minimum taxes, the caption incorrectly implies that no other types of taxes would be affected. Moreover, even if the changes to the minimum tax were the only effect of the measure, the unexplained use of the word “modifies” fails to communicate how IP 30 would change minimum taxes. Will the measure raise taxes or lower them? The difference is significant.
We recognize that trying to describe all the major effects of a multifaceted, complex measure in 15 words can be difficult, and sometimes not possible. At times, it may be necessary to describe those effects generally. See Kain v. Myers, 336 Or 116, 121, 79 P3d 864 (2003). However, the caption still must “reasonably identify” the subject matter of the measure.
Neither of those possible approaches is, of course, perfect. The 15-word limit will often require trade-offs between detail and breadth. But, even in such limited space, more specific words can convey IP 30‘s “major effects” more completely than the Attorney General‘s version. A ballot-title caption written in terms so broad that they convey only one highly generalized aspect of a ballot title‘s multiple, important effects does not substantially comply with
McCann also challenges the result statements.
The Attorney General certified the following “yes” vote result statement: “‘Yes’ vote will decrease annual minimum tax for some corporations, increase annual minimum tax for some corporations, depending on amount of corporation‘s sales in Oregon.” McCann argues that the “yes” vote result statement suffers from the same defects as the caption. The “yes” vote result statement is an improvement on the caption in that it specifies how minimum taxes will change. But it neglects to disclose at least one other important effect: IP 30 would exempt corporations with Oregon sales less than $10 million from the profits tax. Accordingly, and especially because the result statements may use 10 more words than the caption, the “yes” vote result statement should include that “most significant and immediate” change to the profits tax.
The Attorney General certified the following “no” vote result statement: “‘No’ vote retains current law, does not change amounts of minimum tax for corporations that are based on amount of corporation‘s sales made in Oregon.” Although this statement accurately describes that a “no” vote will not change minimum tax liabilities, it
We turn finally to petitioners’ challenges to the summary.
“Currently, each corporation or affiliated group of corporations filing a tax return under
ORS 317.710 must pay an annual minimum tax; minimum tax amount increases based on the level of the corporation‘s sales in Oregon. Measure decreases the minimum tax for corporations with Oregon sales between $500,000 and $9,999,999. Measure modifies minimum tax for corporations with Oregon sales over $50 million by requiring payment of $50,000 plus 2% of the excess of Oregon sales over $50 million. Eliminates current cap of $100,000 on tax. Corporations with taxable income less than $10 million shall pay minimum tax on sales rather than tax on taxable income. Amendment applies to tax years beginning on/after January 1, 2015. Other provisions.”
Reiterating her arguments about the caption and result statements, McCann claims that the summary omits significant information and uses misleading words. She does not specify, however, which words in the summary are misleading. Rather, she asserts that the summary “contains the flaws discussed” in reference to the caption and result statements, where she argued that the word “modifies” was misleading. Similarly, petitioner Harmon contends that the summary uses the word “tax” in a misleading way. The summary states that corporations with Oregon sales less than $10 million will pay the annual minimum tax instead of a “tax” on “taxable income.” In Harmon‘s view, the initiative should specify to which “tax” it is referring, because, like the word “income” in Green/Harmon, the word “tax” may refer to several different types of taxes. See Green/Harmon, 351 Or at 648 (holding that the phrase “corporate income” in certified ballot title, without more, was misleading because voters will not know if it referred to gross income, net income, or capital gains, among other types of income).
The Attorney General responds that McCann‘s arguments about the summary fail for the same reason that they failed when offered against the caption and result statements. In response to Harmon, the Attorney General rejects his reading of Green/Harmon. In the Attorney General‘s view, Green/Harmon stands only for the limited proposition that, when a ballot title refers to “income,” it must specify the type of income to which it refers. Consequently, because IP 30 does not mention “income,” it cannot be misleading in the sense that Green/Harmon recognized.
We conclude that the summary, unlike the caption and result statements, does not neglect to describe the major effects that IP 30 will have on current law. It discloses the removal of the “current cap of $100,000,” describes that taxes will “decrease[]” for some corporations based on Oregon sales, and explains that “[c]orporations with taxable income less than $10 million shall pay [the] minimum tax” rather than the “tax on taxable income” or profits tax. We also conclude that the word “tax” in that context is not misleading, because it is used as part of a phrase, “tax on taxable income,” which provides enough context, as required by Green/Harmon, to convey adequately what type of tax it is.
We agree, however, that the summary‘s use of the word “modifies” is inadequate because it does not give voters
Ballot title referred to Attorney General for modification.