Economists: Tax Increases Will Boost Economy | The Wandering Eye | Bend | The Source Weekly - Bend, Oregon
The Source Weekly’s reporting is made possible by the power of your support. Be a part of it!
Pin It

Economists: Tax Increases Will Boost Economy 

Moderate tax increases will help Oregon climb out of the recession more than holding down revenues and cutting state services, according to a group of more than three dozen Oregon economists.

Initiatives to repeal two legislative measures that would raise corporate income taxes from the current minimum of $10 a year and hike personal income taxes for the most affluent 3% of Oregonians apparently have qualified for the January ballot.

But contrary to conventional conservative wisdom, the economists – who come from public and private universities as well as the private sector – wrote in an open letter that repealing the increases would do more harm than enacting them.

Because states (unlike the federal government) can’t borrow to get through hard times but must balance their budgets, “There are … no easy options for states in this kind of recession. That said, the worst thing the state can do during a recession is further reduce aggregate demand — the total spending by households, businesses and government. Without the revenue measures enacted by the legislature, aggregate demand in Oregon will further fall and the economy will further contract.”

The economists’ letter goes on to note that “the bulk of the money that the state spends on public services — more than 90 percent of which goes to education, health and human services and public safety — is spent right here in Oregon. Cutting state spending reduces in-state aggregate demand, virtually dollar-for-dollar.”

Moreover, the economists added, the effect would be aggravated by the loss of federal matching dollars: “Some forms of state spending, particularly in the area of health care, bring matching federal dollars into the state’s economy. So cuts to certain public services result in even bigger reductions in aggregate demand because they prevent federal dollars from coming into Oregon’s economy.”

But what about that good old trickle-down effect? If we leave more money in the pockets of rich Oregonians and big corporations, won’t that boost the state economy?

Not so much, the economists say: “High-income people typically don't spend all their money, and some of the money that they do spend is likely to be spent outside Oregon. … And since a significant fraction of Oregon’s corporate taxes are paid by out-of-state, multi-state corporations, the corporate tax measure also does not reduce demand dollar for dollar in Oregon.”

Although the economists focus on the short-term effects of cutting taxes vs. cutting services, the long-term consequences of lowering taxes while letting schools, public safety, transportation and other public needs go to hell aren’t good for the business climate either.

As Oregonian columnist David Sarasohn memorably expressed it a number of years ago: “If low taxes were the secret of prosperity, Mississippi would be the economic powerhouse of America.”

Pin It

Comments (5)

Showing 1-5 of 5

Add a comment

Subscribe to this thread:
Showing 1-5 of 5

Add a comment

Today | Sun | Mon | Tue | Wed | Thu | Fri
Something Dirty Live

Something Dirty Live - Worthy Brewing

Sat., May 28, 7-9 p.m.
Submitting an event is free and easy.

Newsletter Signup

Get Central Oregon daily news
directly in your inbox

Get Social

Latest in The Wandering Eye

  • Moonshine Magic in Bend Still on the Down Low

    • Aug 9, 2012
    Get ready for our great close-up on the home distilling community out next week in our "Best of" issue. We interviewed a mixed bag of legal and anarchist distillers in Bend to find out why distilling is so very, very against the law in one's home. More »
  • The Eye Wanders Off Into the Sunset

    • Dec 26, 2010
    I’m really sorry to break the bad news to them during this season of peace and goodwill, but after this week the right-wingers in Bend and vicinity won’t have The Wandering Eye to kick around anymore. The decision to stop writing this blog was my own, and it was prompted by several factors. More »
  • DADT, Gay-Bashing and the "Icky-ness" Factor

    • Dec 19, 2010
    For the past week or so, “Zeo” of the NW Republican blog has had his jock strap in a knot over the prospect of Congress repealing the military’s “Don’t Ask Don’t Tell” rule. To hear Zeo tell it, if DADT is repealed and gays are allowed to serve openly in the US military it will mean the end not only of our armed forces but of America, its economic system and civilization in general. More »
  • More »

More by The Source Staff

Want to advertise with us?

For info on print and digital advertising, >> Click Here

© 2022 LAY IT OUT INC | 704 NW GEORGIA AVE, BEND, OREGON 97703  |   Privacy Policy

Website powered by Foundation