Bend Bulletin: Measure 66 roller coaster

THE MEASURE 66 ROLLER COASTER RIDE
Bend Bulletin Editorial
June 2, 2010

As long as your check doesn’t bounce, you can make a lot of misleading claims in the Oregon Voters Pamphlet. You can claim, for instance, that “You Gotta Be RICH To Be Impacted” by Ballot Measure 66, as AFSCME public affairs director Rich Loving did prior to the January election. In fact, Measure 66 will affect both those who pay its new income tax rates and those who don’t. The measure’s most conspicuous effect, of course, is the damage it will do to the state’s economic climate. Why would any high-earner or small-business owner move to Oregon when Washington state, just to our north, has no personal income tax at all?

Meanwhile, as Oregon’s revenue experts acknowledge, Measure 66 will further destabilize the state’s revenue stream. According to the state Office of Economic Analysis, Oregon will probably collect nearly $580 million less than expected during the 2009-11 biennium. The culprit, as always, is the personal income tax, which is both the primary source of general fund revenue and the target of Measure 66. The measure boosted the state’s already high taxes for individuals earning more than $125,000 per year and families earning more than $250,000.It’s too early to tell “what impact, if any” Measure 66 and companion Measure 67 are having on actual collections, according to the report, whose authors predict a “significantly clearer picture” in the fall. But they do know that Measure 66, at least, will make such distressing shortfalls even more likely in the future.

How? The personal income tax is a notoriously volatile source of revenue. Collections soar during periods of economic vitality and plummet during periods of malaise. “In past years,” the OEA writes, “the relatively small number of taxpayers impacted by the measure “” two to three percent “” regularly accounted for two-thirds of the change in tax revenues from one year to the next.” Measure 66, says the OEA’s Josh Harwood, has boosted marginal taxes by 20 percent on that tiny, but influential, group. As a result, according to the revenue forecast, “the state can expect to experience greater positive revenue changes in good years and greater losses in revenue in bad years…. It is likely that the most recent months are examples of the latter.”

While relatively few Oregonians will pay higher taxes under Measure 66, everyone will be affected by increased volatility. Government agencies that rely upon the general fund “” particularly public schools “” will be starved even more dramatically by unexpected budget famines. Unexpected budget feasts, on the other hand, are likely to result in even larger “kicker” returns. No wonder lawmakers are so interested in “kicker” reform.

All of this makes Measure 66 a rare piece of public policy, indeed. Not only has it made Oregon a worse place to do business, but it’s also made the state a more difficult place to do government. That’s what you call a real lose-lose.

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  • Matt Evans

    Many, many lies were told – in the Voters Pamphlet and elsewhere – by Governor Kulongoski, Speaker Dave Hunt, Senate President Courtney and those who ran the Yes campaign for Measures 66 and 67. Oregonians seem vulnerable to lies about how “additional funding” will be used to “help the schools” when in fact neither Measure designated even a single dime to K-12 education and of course actually produced less funding rather than more. Since both Measures were retroactive to the beginning of calendar year 2009, it’s particularly shocking that they not only failed to produce the extra $750 million that was promised, but resulted in a $1.3 billion reduction in expected revenue.

    “The Rich” have a distressing propensity to take their ball and go home when taxes get too high. And who can blame them? I don’t purposefully seek out the most expensive products money can buy – especially if I know the quality if poor – and there’s no reason for people to purposefully live in a state that’s trying to be the most expensive. This drain on State revenue was expected and warned about repeatedly during the campaign and is only going to get worse. Current projections are for large State budget shortfalls for years to come. All these folks that Democrats hate so much (but want to tax so badly) are never coming back. They will establish new lives elsewhere – perhaps in one of several states with no personal income tax at all – and their fellow citizens there will gain the benefit of having them in their society.

    Oregon is now following the path Detroit started down a couple of decades ago. In 10 years, we may look as Detroit does now, bulldozing thousands of homes that have stood vacant for years. Perhaps not the desired “open space” initiative, but hey – things look different here.

    • Joker

      And no lies were told by Mark Nelson, who sent fake ballots to seniors, or by Carol Leuthold, sending letters to voters from a dairy farm that doesn’t exist?

      You must be spending too much time owning a business or…wait….

  • Sam

    When will liberals ever learn that revenue doesn’t increase with an increase in tax rates i.e. taxes…If you’re rich you can “afford” to move somewhere else, when you’re on a fixed income you can’t “afford” to move anywhere. Consequently, the state is left with low wage earners and fixed income residents. How in the world does the government expect to create jobs? What business owner in their right mind would want to start a business in Oregon…people in Oregon hate business people…after all they might just make a profit!…shame on them!!.

    People aren’t stupid and by now many citizens of the United States has realized that the people they have voted into office have handled the taxpayer(s) money with carelessness and frivolity. Will the state governments even wake up when they have to file bankruptcy? I doubt that…some people actually believe that Greece couldn’t happen to the US…well many of us say “think again”….

    People must prepare for the worse to come as I believe the “fat lady” isn’t far from singing!!

    • Ron Marquez

      …..”I believe the “fat lady” isn’t far from singing!!”…..

      If you listen closely, you can hear her screeching coming from California. Hurts ones ears.

    • dartagnan

      “When will liberals ever learn that revenue doesn’t increase with an increase in tax rates ”

      Following your “logic” to its conclusion, the optimal tax rate for raising the greatest revenue would be zero.

      Conservatives commonly misunderstand (or misrepresent) Arthur Laffer’s idea. He didn’t say that the lower tax rates are, the more revenue you collect. He said there is an optimal rate for producing revenue and that when you exceed that rate, revenue falls off because of the increased incentive for tax avoidance. In other words, increasing tax rates reaches a point of diminishing returns. The Laffer Curve is a curve, not a straight line.

      • Rupert in Springfield

        You are correct on the Laffer curve essentially being a bell curve. However I certainly would not say it is common for conservatives to misunderstand or misrepresent the Laffer curve. I cannot think of a single conservative on this blog who has ever done so. If its a common error of conservatives, can you name one on this blog who has made the mistake?

        Failing that can you name any notable instances of conservatives misrepresenting the Laffer curve that have happened recently? I cant think of one.

        Can you name a single conservative who has ever claimed that the lower tax rates are the more you collect? I cant think of one who has ever claimed such a thing or would not realize the error if at all pressed on it.

        I can think of plenty of liberals who have made the mistake in the opposite direction, and stood by it repeatedly. That lack of understanding is quite common in liberals.

        Example One – BO using cigarette taxes to pay for SCHIP expansion. Even Bush 2 could figure out that cigarette taxes were a declining revenue stream as taxes get raised to confiscatory levels people stop smoking.

        Example Two – During the primary debates Charlie Gibson pointed out probably the most textbook example of Laffer – Capitol Gains taxes. Historically as rates are raised revenue falls. BO seemed to actually have some grasp of this concept, but insisted he would raise capitol gains taxes anyway, so the rich would pay their fair share. No matter how much Gibson pressed the issue, BO could not grasp if revenue falls from raising the cap gains rate, it hardly means the rich are paying more, they are simply shifting economic activity.

        • valley p

          “I cannot think of a single conservative on this blog who has ever done so.”

          Oh let me try on this one teacher! Please please?

          The answer is Rupert from Springfield. He has consistently denied facts in evidence that Clinton’s tax raise resulted in increased revenues to government, and even a balanced budget. He has claimed, and I almost quote, that the balanced budget under Clinton simply happened. Like magic I guess.

          “Can you name a single conservative who has ever claimed that the lower tax rates are the more you collect?”

          Yes! again….dig ding ding ding….the answer is Rupert from Springfield. On many occasions he has held up the Reagan and Bush tax cuts as resulting in increased revenues for the federal government, mistaking normal revenue increase from economic growth as resulting from tax cuts.

          Rupert wishes to respond. I think he needs a life line.

          • Rupert in Springfield

            >He has consistently denied facts in evidence that Clinton’s tax

            I have never denied that Clintons tax increases resulted in increased revenues to the government.

            >I almost quote, that the balanced budget under Clinton simply happened. Like magic I guess.

            I have never said once that the balanced budget “just happened”

            What I said was that the Clinton tax increases were not responsible for it. The way we know this is in 1994, after they had been in effect for well over two years, Clinton famously sent the new Republican congress budgets with $300B deficits for as far as the eye could see. Therefore even Clinton did not believe his tax increases gave us the balanced budget.

            Got it?

            Good. Maybe next time you wont try and make up things.

            >On many occasions he has held up the Reagan and Bush tax cuts as resulting in increased revenues for the federal government, mistaking normal revenue increase from economic growth as resulting from tax cuts.

            And with this you demonstrate what an utter fool you are.

            The Reagan tax cuts did result in revenue increase, and it was a result of normal economic growth due to them, which is exactly what Laffer would predict. Thus in trying to be funny here, you have proven that you don’t even know what the Laffer curve is you complete total fool.

            Look, – You have really made yourself look totally ridiculous here. Again I wold urge you to stay out of discussions involving economic matters. You simply don’t understand it. Having to make up things I never said to make some goofy point like you try here only succeeds in cementing your place as the blog fool.

          • Anonymous

            Dean Apostol is a douchebag

  • Steve Plunk

    There is a fundamental assumption in play here that I take issue with. The idea that the government revenue stream must be more stable than the income stream of the citizens. Income tax lowers when incomes lower so why shouldn’t our government tighten it’s belt when we are tightening ours? Is there some justification that government should be immune from from the realities of economies that go up and down? This is one of those things that has been said for so long and so often we just think of it as a truth. Hogwash.

    Unlike government citizens prepare for downturns or face the consequences. Smart people, and I would hope our government has a few, should hold reserves and make preparations for lean times. It seems in Oregon lean times means it’s time to close parks and lay off police while fat cat bureaucrats whine about fewer leadership retreats and Florida seminars. It’s time they wake up and feel the pain we feel and maybe realize their policies sometimes help cause the pain.

    The simple logic is if the state revenue stream stays stable during an economic downturn then the citizens are paying a higher percentage of what they have left. That is stupid. Are citizens here to service the public sector or is the public sector here to service the citizens? To me it’s just another small piece of evidence that the public sector feels entitled and expects us to pay whatever it takes to keep them humming along like normal. That kind of attitude will cause the sale of pitchforks to rise.

    • valley p

      “Income tax lowers when incomes lower so why shouldn’t our government tighten it’s belt when we are tightening ours? ”

      Because the demand for government services INCREASES when incomes go down. More food stamps, more unemployment insurance, more people without health insurance, more kids needing a public school education, more law enforcement. You may think this is “hogwash.” To me it is reality.

      “Smart people, and I would hope our government has a few, should hold reserves and make preparations for lean times. ”

      So you support reforming the kicker? Look Steve, when Bush came into office he inherited a surplus. Did he or you say the government should save that for a rainy day? No, he and you said the government should give it back as a tax cut. The last thing Republicans would ever stand for is a government savings account.

      “It seems in Oregon lean times means it’s time to close parks and lay off police while fat cat bureaucrats whine about fewer leadership retreats and Florida seminars.”

      Arizona, California, South Carolina, lot of other states are closing parks and laying people off. Oregon has not closed parks. Travel for seminars and training has been suspended in most states, I believe Oregon included. This suspension hurts many private businesses by the way, including airlines, hotels, and restaurants, leading to yet more layoffs and yet less tax revenue.

      “The simple logic is if the state revenue stream stays stable during an economic downturn then the citizens are paying a higher percentage of what they have left.”

      The logic is simple but not accurate. A huge part of the last budget was due to the federal stimulus. The Feds can and do print money to help bridge recessions.

      “Are citizens here to service the public sector or is the public sector here to service the citizens?”

      Both. As citizens we have obligations to the state and the state has obligations to us. We don’t get to stop sending them money just because our incomes may be down. And if we are in trouble they have an obligation to help. Its a 2 way street.

      “To me it’s just another small piece of evidence that the public sector feels entitled and expects us to pay whatever it takes ”

      Your “evidence” is based on your false assumptions. When you pile assumption upon assumption and consider that as amounting to evidence for your pre-conceived position, that is self delusion, not a case.

      “That kind of attitude will cause the sale of pitchforks to rise. ”

      And that kind of attitude puts you pretty close to sedition. Advocating the armed overthrow of your government is illegal.

      • Steve Plunk

        Really? More blaming Bush for every problem? Get over it please. The headlines today mention Obama’s government running up debt to the tune of $5 billion a day. This is the road to ruin.

        The kicker is in place to return the excess collections during good times back to the taxpayers. Those excess revenues over 2% are sent back. The legislature could have been setting aside that money or even budgeted the rainy day fund. The kicker is not the problem spending is. Look at the chart in the other thread. There are other ways to prepare for a recession like not increasing spending the way the state did. Tax and spend policies have nearly bankrupted us and corrupted the political system.

        You have tried in vain to counter my statement but any fair appraisal shows you woefully short. Sedition? Using a common illustrative political metaphor is sedition? Your pompous ignorance is fully on display with that comment. How far we have come since Jane Fonda could sit on an anti aircraft gun pointed at US airmen and not be charged with treason to my mention of angry citizens with pitchforks as seditious. You liberals are hypocrites.

        We will keep sending our money because if we don’t we risk jail but the fact remains when economic downturns occur the government should tighten it’s belt just as we do. My evidence of the public sector’s failure to serve citizens is not only my experiences over the years but my fellow citizens experiences. It’s not preconceived but rather built upon observation and participation in government for more than 20 years. The natives are restless (that’s an often used phrase as well) and expect changes in the way government does business. It starts with respect for citizens and no presumption government comes first.

        • Anonymous

          Attributing “pompous ignorance” to his noting of your comment, which comes pretty close to a veiled threat of violence, is rather infantile. Yes, it’s a common “metaphor”. It’s getting close to the line, and anyway it’s not too smart when suspicions are already pretty high. It’s also infantile, as is judging the effect of your own argumentation. You think you’re a killer debater, don’t you? You must be, since you judge yourself so.

          However, you might mull over the complete lack of effect of you and your friends.

      • Ron Marquez

        …..”And that kind of attitude puts you pretty close to sedition. Advocating the armed overthrow of your government is illegal.”…..

        Valley p…..I hadn’t planned to get in the middle of this back and forth but to call Steve’s comment “pretty close to sedition” is just plain absurd. Conservative humor maybe but sedition never.

        • valley p

          Ron, I don’t think Steve is interested in over throwing the government. I was just poking at him. As a gray bearded, banjo picking, part time professor, card carrying leftist, I like to turn the tables on you righties from time to time. After all, we have been accused of being unpatriotic and un-American for quite some time largely based on some lefties having stepped over the line in their youthful zeal to end a failed war decades ago. So I now find it amusing to see “conservatives” who once asked us to love it or leave it talking and acting like embittered revolutionaries. Its all fun to watch for sure, but the line between fun and serious can become pretty thin. Abbie Hoffman and the Yippees had a lot of fun for a while, but things did not end too well for many of them. As soon as you advocate actually buying the pitchforks and storming the Bastille, you have crossed the line to sedition. So word to the wise…be careful with your rhetoric.

          For Steve, pointing out Bush’s actual record is not “blaming him for every problem.” It is an illustration to refute your point about governments saving for a rainy day. When conservatives have had a chance to do so they have cut taxes and squandered the surplus. They don’t save. This was true for Reagan and both Bushs.

          Spending is not the problem, tax cuts are. Oregonians voted ourselves 2 massive property tax cuts, shifted responsibility for funding schools to the state, passed a very expensive prison measure, and failed to identify any revenue source. We also voted to lock the kicker into the constitution. We the people blew state financing up, and now we wonder why legislators can’t fund things. Balancing State spending while maintaining services has been a problem ever since our initiatives, and will continue to be unless and until we rectify our previous errors. State spending simply cannot be cut much without screwing up schools or depriving the needy. We have no slack.

          “We will keep sending our money because if we don’t we risk jail but the fact remains when economic downturns occur the government should tighten it’s belt just as we do. ”

          No Steve, the fact does not remain because it was not a fact in the first place. For reasons I clearly stated, government SHOULD NOT tighten its belt just as we do. Quite the opposite. It should tighten its belt during good times when we need government less, and spend more in bad times when we need it more.

          “It starts with respect for citizens and no presumption government comes first. ”

          Respect is also a 2 way street. If you constantly denigrate government employees and officials you should not expect respect in return. Polite dismissal is the best you can hope for.

    • B Samshun.

      What part of “we are all in this together” do you not get? Seriously, now.

    • Anonymous

      Sure, get the government to build a reserve fund — with the kicker, whatever way you want — then there won’t have to be service cuts during hard times. But don’t expect the government workers to pick up the slack because the state’s citizens (through their elected representatives) are too profligate or too stupid to prepare for bad times.

      Otherwise, face the choice of higher taxes or lower services. Like Oregon did in the Measure 66/67 vote. The state decided, you lost. Maybe the voters were wrong, maybe not, but they decided. You guys failed to persuade them. Maybe that should prompt some reflection.

  • Jan

    It appears those tourist/hospitality jobs just don’t pay the taxes the loggers and millworkers jobsfisherman & farmers once paid. The loss of the Fortune 500 companies and thier unwanted industrial jobs have left a big hole in more than just state revenues. It is hard for man to support his family on the socially acceptable job left in Oregon.

    All the feel good special interest legislation has circled around to bite the state in the backside.

  • Sybella

    As a business person in Oregon, I am on purpose not making any attempt to increase my business or my employee base. To do so would be one step forward and two steps back. In fact, I’m cutting my business income where possible. It is the poor that get hurt, because to cover the additional taxes businesses are burdened with, there is no incentive and prices increase to cover the expenses. It is truly a lose lose situation.

    • valley p

      “As a business person in Oregon, I am on purpose not making any attempt to increase my business or my employee base.”

      Well, if your business provides something so unique that no one else can supply it then you might have an impact. But if you are providing a good or service others also provide, then whatever business you don’t do will be done by others and no one will be hurt.

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