The most important battle over the budget in January won’t be happening in Sacramento. Instead it will be happening north of the border, where Oregon voters will decide whether to close their own budget gap by raising taxes on the wealthy and on corporations. Progressive Californians should take a close look at what’s happening up there with Measures 66 and 67 – if they pass, it will be a clear sign that the voters ARE willing to embrace progressive taxation, no matter what Jerry Brown says.

Last summer Oregon’s Democratic legislature and governor approved bills to raise the income tax on people with joint incomes over $250,000 (or $125,000 for individuals) and reduce income taxes on unemployment benefits, as well as increasing taxes on corporations with Oregon profits of more than $500,000. Almost immediately, a coalition of large corporations such as timber giant Weyerhauser and FreedomWorks (Ari Fleischer’s teabagger group) raised money to put the tax increases to voters. The vote will happen all month long – Oregon is an all vote-by-mail state – and “election day” is January 26.

A progressive coalition has come together to defend the increases, including Oregon’s labor unions, in a campaign they’re calling Vote YES for Oregon. Polls show the Yes side has a 17 point lead. The opposition, Oregonians Against Job-Killing Taxes, is funded not only by Weyerhauser and FreedomWorks, but also Phil Knight and NIKE, Columbia Sportswear, and other Oregon companies.

Steve Novick, who ran against Jeff Merkley in the 2008 US Senate primary, is one of the leading organizers and spokespeople for the Yes campaign. Here’s how he explained the popularity of Measures 66 and 67 in an email I received last week:

We are winning because Oregonians care about education, health care and public safety.  They care about investing in our future; they care about protecting the vulnerable. And indeed, if more people knew the simple fact that 90% of the state general fund budget goes to education, health care and public safety, we’d be even further ahead. (So please – keep sharing that fact with them.)  

We are winning because Oregonians think that it’s reasonable to ask households making more than $250,000 a year to pay 1.8% of the amount they make above $250,000 to protect those services. That makes a whole lot more sense to voters than cutting basic services or raising taxes on struggling families.

We are winning because Oregonians think that it doesn’t make much sense for most Oregon corporations – including over 100 corporations (most of them headquartered out of state) that do over $100 million a year in business in Oregon – to continue paying just $10 in the corporate minimum tax.

This message is both populist and popular. Voters understand instinctively that in tough times, the wealthy should pay more in order to continue the public services that are even more necessary in a severe recession. The notions that the anti-taxers are peddling, that the taxes will hurt jobs, or that “waste, fraud, and abuse” can be found and cut instead, aren’t being taken seriously or credibly by Oregon’s electorate.

The Oregon netroots are getting involved as well, with Kari Chisholm and Carla Axtman at Blue Oregon leading the charge against the right-wing’s misstatements. It’s an impressive effort that, hopefully, will win the day when the ballots are counted on January 26.

So what does this all mean for California? It should be obvious. Using progressive taxation to solve a budget deficit is really popular. If Measures 66 and 67 pass later this month, it would be a huge blow to the notion that way too many California Democrats hold, that the state’s voters won’t increase taxes even on the wealthy and large corporations to save their services.

It may be too much to expect Arnold Schwarzenegger, who has consistently bowed to the wishes of California’s wealthy and the California Chamber of Commerce, to ever be willing to do what Governor Kulongoski did in Oregon and help close our budget gap by embracing progressive taxation.

But it’s not too much at all to expect Democratic legislators – and candidates for statewide office – to embrace it. Maybe Speaker-elect Pérez can take the caucus on a field trip to Portland later this month?