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A Midsummer's Tax Increase: Sneak Attack On Oregon's Familiesby
Paul Gessing Sep 26, 2003 While most Oregonians were finishing up their vacations at the beach and
getting ready to send their kids back to school, the Oregon Legislature engaged
in one of the sneakiest tax hikes in history. After a seven-month stalemate
due to insufficient votes to overcome the supermajority tax hike requirement,
five Republican Senators and eleven Republican House members joined Democrats
to pass a massive tax increase. Curiously, the Legislature used a bit
of parliamentary maneuvering in order to pass the tax increase by reviving
a dead bill, loading it with tax increases, and passing it without debate;
not exactly the democratic process as taught in your junior-high civics class.
The tax increase is expected to take $800 million over the next two years
out of the pockets of Oregon's families. Now, the same bloated and inefficient
state government that increased spending by 45 percent per person, between
1990 and 2001, even after adjusting for inflation, will continue to grow.
Amazingly, spending in Oregon increased during this period more than in all
but three other states. Aside from throwing money at the already adequately
funded public schools, the tax plan would give $87.6 million in tax breaks
to businesses, and spend $2.4 billion on social services spending.
Rather than raising one or two taxes at a time, Oregon's package is a hodgepodge
of changes designed to hide the full impact of the tax increase -- in much
the same way as the Legislature hid its actions by sneaking the increase through
at a time when voters were not looking. A three-year graduated income
tax surcharge, with rates based on a sliding scale up to 9 percent, will generate
nearly 70 percent of the $800 million in revenue over the next two years.
The rest of the money will come from an increase in the corporate minimum
tax from $10 to between $250 and $5,000, a reduction in the discount rate
for paying property taxes, several corporate tax increases, and a tax increase
on medical providers that participate in Medicaid.
In addition to passing a massive tax hike, ostensibly due to the state's
budget deficit, Oregon lawmakers recently saw fit to give millionaire baseball
players and owners a $150 million gift at taxpayer expense. Since Major
League Baseball officials have demanded subsidies of at least $300 million,
taxpayers are not on the hook yet, but it is obvious that the everyday folks
who pay big government's bills come in dead last in Oregon.
The Legislature's repeated show of favoritism to special interests -- whether
they're sports boosters or politically connected businesses -- over average
Oregonians who will be stuck with the bill for this largess, is indeed troubling.
With spending restraint in short supply during the 1990s and continuing to
date, it is no wonder that Oregon's 8.1 percent unemployment rate for July
was the highest in the nation. Clearly, Oregon needs to cut taxes across-the-board
for all taxpayers and businesses. Robbing Peter to pay Paul is simply
bad economic policy, especially when Peter is an average family struggling
to get by and Paul is a multi-millionaire baseball team owner.
Gov. Kulongoski's signing of the tax increase and the baseball subsidy bill
are good indicators that no one in Oregon is ready to apply the brakes to
the state's out-of-control spending. Now, only the people of Oregon,
forced to take matters into their own hands via the referendum process, can
stop Oregon's fiscal train wreck. Running a state during tough economic
times requires fiscal prudence and setting priorities. Running a state
into the ground is, unfortunately, all too easy.
Paul Gessing is Director of Government Affairs for the 350,000-member National
Taxpayers Union, a non-partisan citizen group founded in 1969 that works for
lower taxes, less wasteful spending, and accountable government at all levels. |
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