Last Thursday, the Oregon House Revenue Committee ducked the opportunity for real fiscal reform and instead proposed a horror-budget of tax hikes and more tax hikes.
After overspending revenues by nearly $4 billion, this week the Oregon House of Representatives will be voting on almost $3 billion in tax increases. These include:
- Raising the income tax to 11% – the highest level in the United States! This $1.2 billion tax hike will not only hurt working families already struggling to put food on the table – it will destroy business. Well over two-thirds file of small businesses file personal income tax returns. These businesses are the engines of growth driving the Oregon economy, and employ 42% of Oregon’s workforce. With two bordering states having no income tax, individuals and businesses will likely flee for more favorable tax treatment. This is a recipe for economic disaster.
- Increase the corporate minimum tax from $10 to up to $100,000 – nope, that isn’t a mistake. For some businesses, the corporate minimum tax could be increased by a million percent: 1,000,000%. What’s more, it also increases the corporate tax rate to 7.9%, despite the fact that corporate taxes raised less than 7% for Oregon in the last cycle. Raising this tax will not raise much more revenue (projected over 5 years at $762 million) however, it will cut into economic growth and make it even harder for businesses. To add insult to injury, the bill also plans to increase various filing fees and entity fees, making it even more difficult to set up a business.
- A $870 million tax on health insurance premiums – This tax will make insurance more unaffordable, and will reduce access to health care. Many will be forced to downgrade the insurance they have, while others will be forced to drop coverage altogether.
Additionally, the legislature has been considering additional tax hikes on cigarettes and alcohol:
- 60-cent per pack cigarette tax hike – This is an unfair tax on low-income individuals. On average, smokers have a median income of a little more than $36,000, about 30 percent less than non-smokers. Additionally, as we have proven time and time again, tobacco taxes almost never raise the estimated revenue.
- A mind-blowing 1,800% increase in the state’s tax on beer (HB 2461). Oregon should be proud to be the second largest producer of microbrews in the country, an industry that contributes billions to the state’s economy, and yet some legislators want to destroy this industry. Raising the tax on beer by as much as $1.50 per pint, one-third higher than any other state excise tax on beer, will doubtlessly destroy jobs.
Oregon’s current budget crisis was not caused by taxes being too low. The budget crisis was caused solely by unsustainably high government spending. Oregon has increased spending by a staggering 22.6% since 2003. Excessive spending caused this problem and spending restraint – not tax increases – is the solution.
Click here and here for ATR’s recent letters to the Oregon legislature opposing these tax increases.