As if our choices in the presidential election looming in November were not enough to make people uneasy, Oregon also has to think about Ballot Measure 97. The tax experts working for the legislature analyzed this initiative last spring, and their report tells you all you need to know about what would be the largest tax hike in the history of the state.
You can read the 20-page analysis of what was then known as Initiative Petition 28 at http://www.oregonlegislature.gov/lro/Documents/IP%2028%20-%20RR%203-16.pdf. The bare details are that the measure would impose a gross-receipts tax of 2.5 percent on Oregon sales by C-corporations above $25 million a year. This would yield an estimated revenue increase to the state of $3 billion a year or $6 billion every two-year budget period. The 274 largest corporations based on Oregon sales would face a tax hike of $2 billion a year.
A coalition of public-sector unions put this proposal on the ballot in order to increase -- what else? -- resources for employment in the public sector. But even though the initiative is aimed at large corporations, the legislative analysis makes clear that Oregon residents would pay the price.
Two items stand out in the analysis. One is that the corporate tax increase would likely be reflected in higher prices for most of the stuff we buy, amounting to an average increase of $600 a year for the average Oregon consumer. The other is that while the public payroll would grow faster, private employment would slow down. The analysis says that with the measure in effect, public employment in 2022 would likely be 17,700 jobs greater than now projected. And employment in the private sector would be about 38,200 less than currently forecast, with over half of the decline coming in retail and wholesale trade and health services.
The state analysts in Salem cautioned that there was a good deal of uncertainty in their projections because there was no experience with a state tax increase as large as this one, which is 25 percent. The clear implication, though, is that if this measure is approved, we'll get an increase in the size and cost of state government and a rise in the cost of living for everybody else. (hh)