Reading Oregon’s tax vote between state lines

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Oregon voters passed this week two revenue-raising measures to help the state fill a hole in its budget and avoid deeper cuts to education, health care and other public services. The vote signifies approval of actions by the state legislature to raise $730 million in revenue.

Measure 66 confirms higher income taxes on individuals earning more than $125,000 ($250,000 for households) and reduces taxes on unemployment benefits for 2009. Measure 67 raises the corporate income tax minimum from its depression-era $10 to $150 and aims to ensure profitable corporations doing business in the state pay more.

Before the vote, the measures were variously portrayed as job-killing and rich-hating or as fiscally responsible and quality-of-life-saving.

The Wall Street Journal cites Oregon’s Legislative Revenue Office as calculating that more than 97 percent of Oregon businesses would face an increase of $150 a year, or see no change at all.

The Economist says fewer than 3 percent of Oregonians will see their taxes rise and observes how some states embrace services while rejecting taxes:

As a rule, Western voters like laws (for better schools or longer prison terms, say) that cost money, while blocking the taxes that would pay for them, thus helping to break their state budgets in hard times. 

When it comes to taxes, neighboring Washington state is Oregon’s mirror-image twin. Oregon has high income taxes and no sales tax. Washington has no income tax and relies heavily on sales and business taxes.

The Oregon vote has some predicting a flight to Washington’s open arms:

Brian Sullivan, a commercial real estate agent with Coldwell Banker Commercial Bob Bernhardt in Vancouver, said the Oregon taxes will give “Washington an excellent opportunity to shine.”

His firm, which specializes in brokering leases and sales of commercial and industrial property in Southwest Washington, expects to start direct marketing to businesses that might be interested in migrating north.

“Oregon expects to raise $727 million from these taxes,” Sullivan said. “That’s a major number. I’ve already received one call this morning (from a potential client).”

However, the exodus argument against raising taxes begins to lose steam as more states wrestle with similar problems. Washington is also facing budget shortfalls and the governor is about to propose a $780 million revenue plan of her own.

Legislatures, governors and voters are recognizing that balancing state budgets during a recession simply can’t be done without raising revenues. Oregon voters rejected deep cuts to education and health care, choosing a more responsible and balanced approach.

Will Minnesota be next?