Friday, December 4, 2009

Conservative Tax Dogma Takes a Hit

Posted By on Fri, Dec 4, 2009 at 8:49 PM

Props to Kari Chisholm of Blue Oregon for making a point that progressives should make a lot more often: Contrary to conservative dogma, money the government takes in from taxes does not vanish from the economy and disappear into some black hole.

“Let's be absolutely clear about this: Every single dollar that the state ‘sucks out’ of the private economy will be pumped right back into the private economy,” Chisholm writes. “Every single dollar the state receives will be spent on something. Much of it will be spent on payroll - salaries and benefits paid to public employees for the work they do serving Oregonians.

Those public employees (cops, teachers, nurses, judges, and yes, bureaucrats of various sorts) will then go home and spend it in the private economy - groceries, cars, mortgages, running shoes, computers, ski jackets, etc.

The sums that the state doesn't spend on payroll will be spent with private companies that provide materials or services - thus going directly into the private economy. Those companies will spend that money on their own payrolls and on yet other companies that provide them with materials and services - and so on, and so on.”

While we’re on the subject of taxes, conservative dogma also holds that raising taxes even a teeny-weeny bit will drive businesses out of Oregon to other, supposedly more “business-friendly” states.

As Forbes magazine (hardly a "socialist" rag) understands, many factors besides tax rates go into a corporation’s decision on where to locate, and when you consider the whole picture Oregon looks pretty damn business-friendly.

In fact, Oregon ranks a very respectable Number 10 in Forbes’ 2009 “Best States for Business” ratings, surpassed only by (in descending order) Virginia, Washington, Utah, Colorado, North Carolina, Georgia, North Dakota, Texas and Nebraska. The ratings are based on six factors: costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life.

(Interesting footnote: Despite all the “Oregon is Paradise” propaganda, Forbes ranks the state only 25th in quality of life. Evidently the raters thought things besides pretty mountains and trout streams were important.)

As one comment on Chisholm’s post put it, “Oregon is a great place to own and operate a business, and most objective reports and analysis show this.” If conservatives really want our state to prosper maybe they should stop their constant bitching about how “unfriendly to business” it is.  

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