Oregon’s voters supported big increases on state individual income tax and corporate income taxes in the vote-by-mail election that ended Tuesday. Results were 54-46 percent on Ballot Measure 66, the individual income tax, and 53-47 percent on Ballot Measure 67, the corporate tax. (For results, see Oregon Secretary of State, Elections Division.)

The Wall Street Journal page laid out the campaign dynamic in a Jan. 15 editorial, “Oregon at the Tax Crossroad.”

The public unions are the primary drivers behind the Oregon tax hike campaign. In recent weeks, national powerhouses AFSCME and the SEIU have poured close to $1 million into the state campaign to secure passage. Oregon’s public employees have one of the sweetest deals in America. Their average pay is about one-third higher than that of private Oregon workers, and Oregon public employees don’t have to pay anything toward their health-care benefits.

In the last budget, the Democratic controlled state legislature doled out a $259 million pay raise to the government work force, even as the state was facing a near $1 billion deficit. In the last three years, the state has added 25,000 new public employees while losing 40,000 private sector jobs. The union TV ads say the tax hikes are needed to preserve schools, roads and public services.

The Journal, perhaps anticipating the yes votes, noted the value of states as the “laboratories of democracy.” But this experiment has already been run. In raising taxes to protect the public employee unions, Oregon’s voters have followed the California model of governance and taxation. And look how well that’s turned out: California has lost 600,000 manufacturing jobs since 2000, 32 percent of the state’s manufacturing workforce.

Oregon’s unemployment rate is 11 percent, by the way.

Back in the ’60s, anti-growth Gov. Tom McCall famously told Californians to come and visit, but not to stay. Now Oregon’s voters have sent their own version of the message: California’s policies are welcome, it’s the jobs we’re telling to leave.

• Christian Science Monitor, “Oregon voters raise taxes on wealthy, businesses”
• Bloomberg, “Oregon Approves Tax Increase on Top-Earners, Business“
• Oregonian, “Oregon voters pass tax increasing measures by big margin“

A Wall Street Journal editorial, “Oregon at the Tax Crossroad“:

Oregon’s unemployment rate is 11.1%, among the nation’s highest. But Oregonians are now voting by mail whether to endorse a pair of tax increases passed by the legislature last year: one to raise the state’s top personal income tax, to 11% from 9%, and another to raise the business income tax, to 7.9% from 6.6%. Both tax hikes would be retroactive to January 1, 2009.

Votes will be counted on Measures 66 and 67 on Jan. 26. The Journal regards the elections as a useful referendum on whether states can tax their way into prosperity, and it’s also a measure of the public employee unions’ political clout.

In recent weeks, national powerhouses AFSCME and the SEIU have poured close to $1 million into the state campaign to secure passage. Oregon’s public employees have one of the sweetest deals in America. Their average pay is about one-third higher than that of private Oregon workers, and Oregon public employees don’t have to pay anything toward their health-care benefits.

In the last budget, the Democratic controlled state legislature doled out a $259 million pay raise to the government work force, even as the state was facing a near $1 billion deficit. In the last three years, the state has added 25,000 new public employees while losing 40,000 private sector jobs. The union TV ads say the tax hikes are needed to preserve schools, roads and public services.

See our earlier post, “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.”