Oregon Cannot Recover from our Dismal Economy with These New Taxes

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med_Pamelas_Mug_copy55Measures 66 and 67 send the wrong message to Oregon’s business community:  if you are considering business investment in our state, take your money and jobs elsewhere.  The Oregon legislature has decided to pit those who sustain our economy (small business owners and corporations) against public education, safety and social services.

If they had any inkling of how our economy works they would understand that the success of Oregon’s business community is the key to recovering from this recession.

Instead, elected ‘leaders’ in Salem chose to create a permanent increase on the income tax that lands on the very people Oregon needs to empower their businesses and their employees.

The Democrats who control the Legislature could have fathomed a modest temporary package of business tax increases (including raising the $10 minimum corporate tax) with the full support of the Oregon Business Association and other business alliances.

They couldn’t see that spending was out of control. They couldn’t see the potential in rolling back pay raises, eliminating duplicate funding in many bureaus or transferring excess fund balances in
other areas.

The only thing that these so-called legislative leaders could come up with was an outrageous tax plan that would threaten any hope of an economic recovery. Their plan was ill-conceived from the
get go.

Instead, they chose to create a series of corporate and personal tax increases that has enraged virtually every business group and commercial sector in Oregon.  Oregon’s problem is not the need for more revenue, but the need for more control of spending and the use of unused funds in the state’s coffers.

Consider that the total state budget for 2005-07 was $40.8 billion and for 2009-11 it is $56 billion—a 37 percent spending increase in only four years.  In the current budget, Oregon has 1,540 additional employees, increased spending by $4.7 billion (9.3 percent) and increased long-term debt by $4 billion.

Senator Chris Telfer has the right idea in her Back to Basics Budget proposal which employs a number of cost saving measures at the state level, as well as utilizes a small portion of the state’s agency reserves.    The plan requires no increases to taxes and no cuts to schools, public safety or social services and preserves the estimated excess of 70,000 Oregon jobs that would be lost if these measures were to pass.

If Measure 66 passes, Oregon will have a top personal income tax bracket of 11 percent, and will tie with Hawaii’s new tax rate and share the distinction of having the highest tax rate in the nation.  If you were an employer and were looking for the best state to base or grow your business, would you go to a state with the highest income taxes in the nation?

Measure 67 will tax Oregon corporations (no matter how big or small they are) on their gross sales and net profits. The tax increase is 1/10 of 1 percent of sales, and when the profit margins are only 1-3 percent it can represent a 10 percent tax increase on profits. It just does not make sense to burden Oregon’s higher income earning taxpayers and high volume businesses with additional, permanent tax increases. Their only recourse will be to pass the increase on to the cunsumer and cut jobs to pay the bill.

The consequence of the state’s insatiable appetite for additional revenue through tax increases will be a slower economic recovery and the loss of thousands of jobs for Oregon workers.  The propaganda coming out of Salem is disingenuous at best. They said that they reduced expenditures this last session by $2 million. What they actually did was reduce expenditures from their original proposed budget (in business we call that the wish list). In fact, they increased expenditures from the previous budget by 9 percent.

How can we reward our state for its excessive spending habits? While the rest of us had to lay people off and tighten our belts, the state did not. Oregon has lost almost 130,000 private sector jobs since the recession started in November 2007.  Meanwhile, government sector employment has continued to rise increasing by more than 2 percent, while private sector employment has dropped 9 percent.  (In addition, the average state employee making $65,000 had their salary increased by nearly $900 last year.)

We have already been slapped with an increased gas tax, increase in vehicle registration and title fees and a new sales tax on health insurance policies and hospital bills. At what point is enough enough?
The State of Oregon has not tightened its belt at all. Instead they want to scare us into voting yes by saying that education and safety are the victims of a cutback.

We need to send a message to Salem that these tax measures and their scare tactics are not acceptable. Vote no on Measures 66 and 67. PHA

P.S. As we post this editorial we’re reminded that today, January 18, is a state and federal paid holiday celebrating Martin Luther King’s Jr. birthday. A good thing to celebrate for sure. However, think about this: all government and bank employees get the day off with pay. We’re not sure about you, but the rest of the private sector, including this business, is still working. What’s wrong with this picture?

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