Unemployment at 11.1 Percent, and Oregon Would Raise Taxes?

After spending two weeks in Oregon, we leave still puzzled at the state’s inclination to make it hard for people to live there. With all its natural resources and human talent, Oregon could be a growing, thriving place, but instead too many of its leaders work to make it poorer.

Oregon’s unemployment rate stood at 11.1 percent in November, and yet two measures on the Jan. 26 ballot would raise taxes on individuals and corporations and make the state even more inhospitable to employers. Measure 66 increases the state income tax on individuals making more than $125,000 annually, while Measure 67 establishes a minimum business tax and raises the tax rate on some corporations by 1.3 percent. The additional tax revenues would go to the state general fund budget to be allocated by legislators, but advocates — including the teachers and nurses’ unions — are selling the measures as a tax increase on the wealthy for schools and health care. Theirs is an unusually explicit message of class warfare.

The Oregonian’s editorial board, generally moderate to liberal, was sharply critical of the politics that led to the measures. In the paper’s Sunday lead editorial, “Wrong time, wrong tax hikes: Vote no on Measures 66, 67,” the editors wrote:

The two referrals on the Jan. 26 special election ballot — Measure 66 and Measure 67 — insist that Oregonians pick a side, to accept one lousy, harmful choice or the other. No, we won’t do it. You shouldn’t, either.

It didn’t have to come to this. The Democrats who control the Legislature could have approved a modest and mostly temporary package of business tax increases with the full support of the Oregon Business Association, which represents many of the state’s largest and most public-minded corporations.

Instead, Democrats bent to the demands of the most liberal members of their House caucus and approved an unwise and ill-timed package of corporate and personal tax increases that has infuriated virtually every business group and commercial sector in Oregon.

The invidious politics is bad, to be sure, but the effect on the state’s employers, start-up companies and multinational firms alike, is most troublesome. As Bob Wiggins of Mount Hood Equity Partners argued recently, contrary to what the advocates claim, the increases would undermine Oregon’s existing tax advantages that attract business and effectively give Oregon the highest corporate tax rate in the country. It’s an excellent analysis reposted at ThinkOregon.

The Oregonian was not exaggerating when it noted the united business opposition to Measure 66 and 67. Just take a look at the lists of organizations and businesses backing Oregonians Against Jobs Killing Taxes. Manufacturers are well represented among the members.

Still, much more is at stake than just the bottom line for business.  Hasso Hering at The Albany Democrat-Herald made two critical points in an October editorial:

  • “Every working person in Oregon depends on the state economy, and if the increases slow the economy or keep it from accelerating soon, everybody in the state will suffer, not just the 2.5 percent targeted by the hike in the personal income tax.”
  • “Out-of-state corporations are not generally known to be benevolent outfits that bill their shareholders or CEOs for added expenses in Oregon. If Oregon adds to their expenses, as the legislature wants to do, they force their Oregon operations to pay the bill. More layoffs are the likely result.”

 

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