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Taxing and Spending in Oregon

1 min readBy: Jonathan Williams

Fresh off his solid re-election in November, Governor Ted Kulongoski of Oregon has already called for massive new government spending – higher taxes also are on the Governor’s agenda. From State Tax Today:

“Even with a rosy revenue outlook, Kulongoski wants to raise taxes on cigarettes, corporations, and auto insurance by nearly $600 million to pay for expanded healthcare, education, and law enforcement.

Kulongoski’s spending plan, released December 4, marks the first time in years that the state’s governor could propose big spending increases rather than cuts to state services.

“After climbing back from our state’s deepest recessionA recession is a significant and sustained decline in the economy. Typically, a recession lasts longer than six months, but recovery from a recession can take a few years. since the Great Depression, we are regaining our economic footing,” Kulongoski said at a news conference in Salem. “For the first time in nearly a decade, we can do more than simply make ends meet.”

Oregon taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. system currently ranks 10th best in the 2007 State Business Tax Climate Index – primarily because Oregon is one of five states that do not levy a statewide retail sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. .

Even though Oregon is presently ranks in the top ten 10 of business tax climates in the nation, lawmakers should not rest on their laurels. If “tax and spend” policies dominate the 2007 legislative session, it will only be a matter of time before Oregon’s taxpayers will see their hospitable business tax climate begin to erode.

While spending the entire surplus will undoubtedly earn short-term political points, lawmakers should consider investing surplus dollars for the long-term. In today’s competitive business environment, labor and capital are more mobile than ever before. Therefore, it becomes especially important for states to structure their tax systems in a manner than will compete for global business investment.

To learn more about taxes in Oregon, click here.