Higher Taxes, Less Services A Thing of the Present

I live in Oregon. In the election in March we passed two new tax increases, one on people making $200,000 or so per year or more and another on all businesses. The business tax raised the minimum and also passed, for the first time in state history, a revenue (sales) tax. I contend that the business revenue tax is debilitating and will likely drive companies out of the state, particularly given that the next state over, Washington, is a 10 minute car ride from Portland.

In today’s Oregonian newspaper is an interesting article about how each state ranks from a tax burden perspective. According to the rankings by The Tax Foundation, Oregon dropped from number 8, ahead of Washington State in 2009, to number 14 for tax climate. Their ranking, available here in pdf format, takes into account corporate, individual, sales, property and unemployment taxes. Not as bad as I thought.

I still believe that the revenue tax will go down as a bad idea. I think the unintended consequences of the business revenue tax will make Oregon’s tax collection worse, not better, as it drives companies and employers away. It also puts Oregon on a different playing field from other states as it is an unusual tax for a state that has no personal sales tax rate. (Washington State has a revenue tax but they don’t have an income tax.) Infinity Softworks pays 4% more in taxes than my neighbors across the border, which isn’t a big deal until you realize we are talking about another employee ($80,000) on $2 million in revenues. And when we are losing money it is even more painful as now I have to pay the government instead of myself.

The reality, though, is that every state — and the nation as a whole — is soon going to have to re-think taxing and spending. Our governments cannot continue to support the current plethora of programs without raising taxes significantly (or vice-a-versa). Without cutting spending or raising taxes we will be dealing with much more significant problems soon enough.

3 thoughts on “Higher Taxes, Less Services A Thing of the Present

  1. Where exactly are they going to go? Oregon is 47th in total tax burden out of 50 states. Which spending program that directly benefits you are you willing to cut?

  2. Wow! Mr. Cheney weighing in on my blog! I’m impressed that you’d take the time.

    I’m all for dissenting opinions and feel that with more information we can all be better educated, but throwing a number (47th out of 50 states) is dubious at best without a source. Can you provide one?

    As for which programs I’m willing to cut, it is beside the point. As a nation the Congressional Budget Office (http://www.cbo.gov/) is predicting trillion dollar annual deficits as far as the eye can see. And even with these two tax increases the good state of Oregon is still in the red and has to cut $150 million or so from the budget (source: NPR) which will only increase if the tax base keeps shrinking.

    So… back to my point. We either need to cut spending or raise taxes or both. I’m willing to take it in the chin a little to help the state. But I want the state’s priority on increasing the tax base, which means focusing on employment, which brings in more revenues.

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