Yet another tax burden on Oregon's poorest citizens

Folks who know me know my bumper-sticker distillation of tax policy:

All Taxes Tax the Poor: It's Not Who Writes the Check, It's Who Pays the Price!

And now we have another perfect example, in the passage of 66 & 67.

With 66, Oregon voters increased the income tax rate on high earners in the state by 20%. Gee, I wonder what they will do, don't you? Let's see, they might:

• Leave the state. Most money is mobile, and so are the people who have earned it.
  • Oregon's economy loses all of their investment, savings, and spending.
  • Oregon's government loses their tax payments.
• Stay, but reduce their other uses of income, offsetting the money paid in tax.
  • Less investment and saving.
  • Less discretionary spending.

Less investment and saving means less money available to build homes, apartment complexes, business parks, shopping malls, etc. And that loss of activity means fewer jobs.

Less discretionary spending means fewer cars, TVs, restaurant meals, shoes, movie tickets, etc. are sold. Lower economic activity means... you guessed it... fewer jobs.

With 67, Oregon's voters decided to increase the taxes on corporations, as if the tax cost stops right there. Gee, I wonder what those evil corporations will do? They might:

• Leave the state, with the jobs. Need examples? You haven't been watching the last 20 years, then. Georgia-Pacific, White Stag, Pacific Power....
  • Jobs leave with the company.
• Cease operation, especially if they are already in marginal condition. Imagine being a company with $2 million in sales, but $2.2 million in costs, faced with this new tax on gross receipts. Before 67, they would pay a $10 minimum tax -- basically a filing fee. Now, they will pay $1500 for the privilege of employing Oregonians.
  • Jobs cease, too.
• Reduce costs. They can't command their suppliers to lower prices, so what's left?
  • Reduce employee pay, by rate or hours.
  • Reduce employee benefits.
  • Reduce the workforce.

How hard is it to understand that when ANY entity writes a tax check, that money must come from reductions in investment and spending elsewhere? Every time the government levies a tax on a person with discretionary spending -- that is, spending that's not on survival necessities like basic food, shelter and clothing -- the person will reduce that spending, which reduces economic activity, which in turn costs jobs and reduces overall tax revenue. Every time the government levies a tax on business activity, that activity is itself reduced, resulting in, again, fewer jobs.

This destructive cycle has a amplification factor built into it, which seems to be totally misunderstood by many of Oregon's voters and legislators: the more we punish economic activity, the less we get of it, which is itself punishing to economic activity, and we get even less of it.

The good news is when the tax rates are reduced, the same amplification factor works the other way: more jobs creates more activity, and again more jobs.

Which brings me back to the bumper-sticker conclusion: at the end of the day, there is only one group who cannot adjust, by reducing investment and discretionary spending, to higher, punishing taxes levied on Oregon's economy: the poor. They are at the mercy of disconnected and uneducated Salem legislators and tax-coveting Oregon voters, and no amount of transfer payments to them can overwhelm the fact that they lose jobs and buying power when tax rates rise on ANYONE else. Indeed, even though Oregon will now require corporations and wealthy taxpayers to write the checks for the legislature's unrestrained appetite, it will be the poorest, who simply can't adjust their spending, who will pay the price.

These new laws might keep someone in Lake Oswego from buying a new Lexus, but they will certainly and inexorably cause someone else in Oregon to lose their income, their home, or worse. Don't expect to hear about it from the governor's office or the public employee unions, though. They will blame somebody else for the destruction of the helpless.

Please, God, let Oregon's voters come to understand that it is impossible to shield the poor from a tax-stifled state environment, and that the best cure for poverty is a robust economy, where the jobs are hunting after workers instead of the other way 'round.