Oregon voters are currently deciding on personal and business income tax increases. Should the tax hikes pass, look for Oregonian businesses to avail themselves of the advantages of tax competition and move to other states, such as nearby Washington:
A great beauty of the American federal system is that any of the 50 states can offer its policies as an experiment for others. So the nation owes some gratitude to Oregon for testing whether it is possible for a state to tax its way from deep recession to prosperity.Oregon’s unemployment rate is 11.1%, among the nation’s highest. But Oregonians are now voting by mail whether to endorse a pair of tax increases passed by the legislature last year: one to raise the state’s top personal income tax, to 11% from 9%, and another to raise the business income tax, to 7.9% from 6.6%. Both tax hikes would be retroactive to January 1, 2009…
… the liberal Portland Oregonian has editorialized against the new taxes, which it says would target “the very businesses and employers that Oregon is depending on to lead an economic recovery, start hiring again and pay the wages that support state services.”The battle in Oregon is a case study in the political drama now unfolding in many states. Essentially, it’s about whether a state’s wealth belongs to its public employee unions or to everyone.
The public unions are the primary drivers behind the Oregon tax hike campaign. In recent weeks, national powerhouses AFSCME and the SEIU have poured close to $1 million into the state campaign to secure passage. Oregon’s public employees have one of the sweetest deals in America. Their average pay is about one-third higher than that of private Oregon workers, and Oregon public employees don’t have to pay anything toward their health-care benefits…
…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.
http://online.wsj.com/article/SB10001424052748704281204575003120650 806714.html?mod=WSJ_Opinion_MIDDLETopOpinion
