Is Oregon at the Tax Crossroads?

The Wall Street Journal editorializes on Friday that Oregon is at the tax crossroads. The Oregon Legislature, dominated by Democrats, voted to increase the state’s top personal income tax bracket to 11% from 9%; they also voted to increase the state’s business income tax to 7.9% from 6.6%. Signatures were gathered and a mail election is underway on whether or not these tax increases actually go into effect.

The Journal notes,

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 11% income tax rate will make Oregon’s income tax about twice as high as the national average. Businesses in Portland can move across the Columbia River to Vancouver, Washington and pay zero income tax. Oregonians used to argue they didn’t have to pay a state sales tax. But the current tax proposal imposes a first-ever “gross receipts tax” on certain retail and wholesalers. This is a disguised sales tax.

The days of unlimited tax and spend are ending. The election in Massachusetts is demonstrating the anger of Americans towards the Democrats’ tax and spend proposals. We’ll have to wait a couple of weeks to see if Oregonians send a message to their legislature about increasing taxes in a recession.

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