Posted: Friday, May 29, 2009 12:00 am
Democrats leading the revenue committees in the legislature plan on raising the tax rates on top earners and corporations. That's no way to help the Oregon economy and the state budget at the same time.
The plan is to raise the top income tax rate from 9 to 11 percent. This would apply to incomes above $125,000 for single filers and $250,000 on joint returns.
For companies, the current tax rate is 6.6 percent. The Democrats would keep that rate for income up to $250,000. On anything beyond that, the rate would go to 8.2 percent.
For people with hefty incomes, paying a top marginal rate of 11 percent will not put them in the poor house. But keep in mind that they also pay the top marginal rate in federal income tax. So for the top earners, the top rate likely totals more than 40 percent. It's enough to cause some people to move to Vancouver in no-income-tax Washington state. And if they move their business too, Oregon loses whatever jobs they support.
The corporate increases are even less sensible from an economic standpoint. Corporations are strictly business. If their costs increase one place, they decrease them someplace else. Any substantial increase in taxes curtails their ability to do business.
It's not as though corporate activity would be untaxed even if the corporate excise or income taxes were zero. Their employees and owners pay state taxes on their income already. And corporate business activities - one hopes - keep people employed.
The Democratic revenue chairs, Phil Barnhart in the House and Ginny Burdick in the Senate, talk in terms of fairness.
"The people of Oregon deserve fairness - especially in light of our economic crisis," Burdick said about the corporate tax boosts. "We need those who are able to pitch in to step up and help. This proposal is part of a balanced approach to preserving education and the state's other vital services."
It sounds good, but fairness does not keep a business in business. Fairness does not keep people employed and paying taxes.
Legislators ought to listen to those of their colleagues who know how business operates and what it takes to keep people employed. Some of them know that with a quarter million Oregonians out of work, priority one is not to make the employment climate in the private sector worse. (hh)