Meet the New Tax Reform…Same as the Old Tax Reform

Oregon Governor John Kitzhaber, fresh off his early October special legislative session “Grand Bargain” success, says he will now turn his attention to tax reform. He has plenty of company in Oregon’s recent history.

Governor Barbara Roberts, concerned that property tax limitation Measure 5 which passed in 1990 would decimate state finances (it didn’t), embarked on her Conversation with Oregon to find out what the average voter might accept in the way of tax and other reforms. Thwarted by the divided legislature, she later supported legislatively referred Measure 1 in 1993, which proposed a new five percent sales tax to fund education. The referral also offered property and income tax reductions. Voters said thanks, but no thanks, with a resounding 75% No vote. It marked the ninth time in state history that voters had rejected adding any state sales tax on top of property and income taxes.

Most recently, Governor Ted Kulongoski appointed members to the legislatively created Comprehensive Revenue Restructuring Task Force in 2007, but it was clear to me (as a member of the Task Force) that no serious “restructuring” was in the cards.

Ask the average Oregonian what “tax reform” means, and they are likely to say it means “more taxes.” And, so far they’d be correct.

Before Governor Kitzhaber has even hinted at specifics of his upcoming tax reform plan, several state legislators are fleshing out their own version of “more taxes” which includes a five percent sales tax coupled with property and income tax reductions. This time, they have in hand a Legislative Revenue Office analysis that says it will create 55,405 new jobs and raise $488 million a year in net tax revenue.

So again, this latest “tax reform” discussion seems to focus on raising more money for the state, thus leaving less money for its citizens and visitors. The concept of “spending reform” doesn’t seem to be on the table, and why should it if legislators and the Governor truly believe that government spending is more important than our own family budgets?

As I’ve noted previously, “Any sales tax is dead in this state―unless coupled with elimination of another tax. Reducing other tax rates won’t sell a sales tax.” That isn’t just my prediction, it’s the expert opinion of Portland pollster Adam Davis, based on focus groups he did for Governor Kulogoski’s Task Force in 2007 and more recent quantitative analysis that convinced him that Oregonians will not accept a third tax…period.

This latest legislative proposal seems determined to make the same mistake that legislative referral Measure 1 made in 1993, blindly hoping that somehow, some way, Oregonians will believe politicians when they promise to lower other tax rates in return for creating a new third tax. But history shows that voters don’t believe such promises. Unless the property or income tax is entirely wiped off the books (I prefer eliminating the income tax), an Oregon sales tax seems destined to be soundly defeated for the tenth time since statehood in 1859.

Even if by some miracle a third tax were approved by voters, it wouldn’t solve our state’s fiscal problems. The best way to do that is to tackle “spending reform” first, finding ways to reduce the size and scope of government. Otherwise, any “tax reform” simply will mask our fiscal problems for a while by allowing government to continue to grow until once again it prices itself above our ability to pay.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

The Wages of Sin Taxes

In a misguided attempt to save us from ourselves, Oregon legislators have become addicted to the so-called sin taxes they place on booze, drugs, and gambling. If we don’t break their addiction, it will expand into areas such as sugary soft drinks and fatty foods.

Now, a provocative new study challenges the whole concept of sin taxes, finding that they “not only do little to limit the use of ‘bad’ products, they do nothing to reduce societal costs.” Most remarkably, the study “demonstrates that those shockingly large estimates of the costs that the consumption of alcohol, tobacco, sugar, and fat supposedly impose on society have little basis in reality.”
Sin taxes also hit the poor harder than the rich. That’s because products like tobacco and state lotteries are disproportionately purchased by lower income people.

 

Sin taxes also give governments “a financial incentive to foster the very vices they profess to despise.” This may explain why, out of the more than one billion dollars Oregon has received to date from the Tobacco Master Settlement Agreement between 46 states and the tobacco companies, “not one penny has gone to tobacco prevention.” Prevention would cut into the state’s lucrative tobacco tax revenue, just as it would cut into state monopoly liquor revenue. The same goes for the state lottery that supposedly does good things at the expense of addicted gamblers.

It’s time that Oregon break its addiction to sin taxes.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

Terminate Illegitimate Government Programs…Before They Terminate Us

I recently heard that the Oregon legislature actually may kill a wasteful, non-productive, and from my perspective, illegitimate government program.

I won’t tell you which one, because that could give its supporters time to organize and to pressure legislators to keep squeezing taxpayers for more money to keep their gravy train alive. This program and many others wouldn’t have existed in the first place if we had kept true to the legitimate purpose of government in America.

Our founders gave us a government whose proper role is to protect our lives, liberty, and property, not to redistribute wealth, nor to offer us bread and circuses. However, modern day national, state, and local governments have morphed into much more than this.

The beneficiaries of these illegitimate government programs will keep coming back, until they get what they want from us. This reminds me of a famous line in the original 1984 Terminator movie. Here it is, spoken by the character Kyle Reese to Sarah Connor. Listen now, and understand what we’re up against:

Listen, and understand! That Terminator is out there! It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead.

For Cascade Policy Institute, and every believer in limited government, I’m Steve Buckstein, and “I’ll be back.”

 

Recent K-12 Education Reforms Let Kids Transfer to a Brighter Future

Public education exists to serve children – period. However, as evidenced by the Oregon Education Association’s (OEA) ongoing actions, some believe public education should serve primarily the adults who work in the system. Thankfully, this legislative session, Oregon’s state leaders concluded otherwise.

After tense negotiations on several education-related bills, Oregon’s legislature passed the most substantial education reforms Oregon has seen in decades, at the governor’s request. The more “controversial” elements of that package will provide students – who find their traditional public schools unsuitable – more educational options from which to choose, including charter and online schools. Such student-focused, choice-based measures were a particular pebble in the OEA’s shoe. Why?

Choice threatens the OEA’s monopolistic hold on public education. That grasp has allowed the OEA (a union) to become Oregon’s most financially powerful special interest group, lobbying for, well, itself. So when something undermines that power – even if that something is beneficial to children – the OEA will stand in the way, as it did this legislative session. Oregon families should be grateful the OEA lost and the governor and legislators led. Now, many children in need of a better education no longer will be held hostage.

For example, last summer, more than 4,700 Oregon kids were on waiting lists for charter schools. Because school districts were not authorizing enough additional charters to keep up with demand, desperate families have been left high and dry. (Currently, only districts and the State Board of Education can sponsor charters.)

Now, if charter school applicants are denied by districts, they can appeal to public colleges for sponsorship, providing a new avenue for charters to grow. Although public colleges will be able to sponsor just one charter each, this should help hundreds of families find the schools for which they are looking.

Many Oregon families also have been waiting for access to virtual, or online, charter schools. Currently, Oregon’s virtual charters are operating under an enrollment cap that has kept many kids from using this innovative option. Online learning is emerging as a cutting-edge way for students to have wider access to courses that otherwise might be unavailable to them.  If Oregonians want to enroll their children in such schools, why not let them?

Thanks to state leaders, kids now will be able to access any virtual charter school without having to obtain their local district’s permission – at least until three percent of that district’s students are attending a virtual school. Although still unnecessarily limited, this improvement will be life changing for families who have been denied entry. It also will make it easier for families who have received permission but have had to wade through the same transfer paperwork year after year.

The third choice measure that will benefit Oregon students essentially carries charter schools’ open-enrollment policy over to traditional public schools. Today, it is difficult, if not impossible, for parents to enroll their children in out-of-district public schools because districts often refuse to let kids transfer. Now, parents will be able to enroll their children in any public school, as long as the receiving school district is accepting transfers.

In short, districts no longer will be able to force kids to stay in their local public schools if they’re able to get a public education elsewhere.

The OEA claimed that giving parents such choices creates financial instability for schools (by losing transferees). Other states, which have such policies in place, seem to cope. Why can’t Oregon? Moreover, this begs another question: Does the OEA believe that it and traditional public schools are entitled to students?

If parents choose to leave a school, that suggests something is either wrong with the school or, even if the school is “good,” their children’s needs aren’t being adequately met. In both instances, parents believe they can find a better fit for their kids elsewhere. If the goal of public education is to educate, why deny children access to schools that could do a better job of educating?

Oregon’s lawmakers and governor finally are answering that question. They’ve put partisan politics aside to support reforms for which thousands of Oregon families have been waiting. There still is much work to be done to ensure Oregon’s children – not the OEA – are the true  of beneficiaries public education. But this start will show Oregonians that the sky doesn’t fall when choice is incorporated into public education; it gets brighter.

 

Water Storage Can Provide Many Benefits

 Karla Kay Edwards
QuickPoint!


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Water is the lifeblood of the Oregon economy.  Whether it’s the water that turns the turbines to generate clean and cheap energy, acts as the essential nutrient for agricultural commodities, or provides a multitude of recreational opportunities and environmental essentials— water is needed for every aspect of our lives and economy.  Yet, Oregon continues to pass bills like HB 3369 which allowed one storage project to move forward while creating huge hurdles for any new proposed projects to clear. This can lead to the stifling of opportunities to store water at favorable times and create efficiencies within various water uses.

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