Debunking Tax Increase Claims

[audio:QuickPoint 11-4-09.mp3]

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The campaign over two legislative tax increases is heating up. Tax proponents are latching onto a recent Legislative Revenue Office (LRO) report which they claim argues that raising personal and business income taxes now will actually be good for Oregon’s economy.

But that claim is refuted by dozens of academic studies which find that increasing personal and business income taxes actually lower employment and economic output. Recent studies of these two specific measures find that the personal tax increase will cost the state over 30,000 jobs, and the corporate tax increase will cost the state over 40,000 jobs.

Even the LRO report found that these tax increases would reduce employment and personal income over the next seven years.

The only way the LRO concludes that the taxes might help the economy after seven years is if the added funds result in “productive” state spending. But that surely won’t happen given the looming Public Employee Retirement System (PERS) crisis. In all likelihood, most of the revenue generated by Measures 66 and 67 will be eaten up in higher state contributions to PERS, needed to maintain retiree benefits.

You simply can’t increase productivity if you spend the money on benefits for workers who long since left the job.

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