A Sales Tax by Any Other Name

CascadeNewLogoBy Steve Buckstein

Public employee union backers of Initiative Petition 28 appear to have turned in more than enough signatures to place their 2.5 percent corporate gross receipts tax on Oregon’s November ballot.

While the unions portray their measure as making large, out-of-state corporations pay their fair share of Oregon taxes, the nonpartisan Legislative Revenue Office (LRO) just released its more balanced perspective, which includes:

■ IP 28 will increase state and local taxes by $600 per year on average for every man, woman, and child in Oregon, totaling over $6 billion each full biennium.

■ IP 28 will dampen income, employment, and population growth over the next 5 years.

■ IP 28 will hit lower- and middle-income Oregonians harder than it will affect high-income earners. In other words, it is a regressive tax.

■ Finally, the Legislative Revenue Office concludes that IP 28 will act largely like a consumption tax. It estimates that roughly two-thirds of the $6 billion per biennium tax increase will be passed on to Oregon consumers in the form of higher prices.

Another name for a consumption tax is a sales tax.

Public employee unions back IP 28 because most of the tax revenue it would generate will go into the pockets of their members. Of course, that revenue will come out of everyone else’s pockets.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

  • Bob Clark

    I should think Amazon would add a surcharge for Oregon deliveries to cover IP 28’s 2.5% charge, treating much like a sales tax effectively. No doubt Safeway, Fred Meyers and McDonald franchises for instance will jack up their prices especially as they already have cause to raise prices because of the artificial jacking up of labor floor prices.

    Oregon is clearly becoming a union shop economic model with the state taking over large elements of labor supply. The union shop state can sometimes work as in Germany and its export orientation, although it can become more easily radicalized as with the rise of Nazi and Fascism.

    Don’t think Oregon is enough export oriented and homogeneous in culture to make the union shop export oriented economic model work, where the state also acts to suppress wages so as to maintain the state’s economic competitiveness. In a way, the state becomes an exploiter of labor, even as Marx would have us believe only corporations can exploit labor.

    No Oregon may be more like the state of Illinois which amasses a mind numbing amount of unfunded state government liabilities, and a GOP governor is just recently elected to try to stem the financial bleeding.

    Thomas Sowell has a very good economics book out, “Wealth, Poverty and Politics an International Perspective.” It gives a person an real appreciation for the complexity of economic success and failure. It also kind of hints for me the weakenesses in both Trump and Hillary Clinton. Mr. T invites a shift towards isolation, and this is not usually a good economic thing. But Hillary invites a changing of the court which would very possibly annihilate individual freedoms critical for a creative economy. Whereas a presidency is at most 8 years long, the supreme court appointments of the next president will be generational. Therefore, I vote for Trump and pray his isolation tones are much modified in practice.

  • Eric Blair

    I’ve got to say, dampening population growth may not be that bad of a thing. Especially in the metro area which is having a severe housing crisis.

    • thevillageidiot

      the housing crisis is brought on by much more than population growth. urban growth boundary for one. restrictions on building infill. “save the neighborhood”. etc. anyway a sales tax is sales is sales tax. how many times must the voters declare not in this state. it has never come close to passing before. but if it is well hidden and publicized as a tax on business since business is a bad word and evil then it may pass. The people pushing this initiative are evil.

      • Myke

        Here, here!

  • David Johnson

    The metro areas have severe mental problems when they keep voting in all the liberals that continue to raise taxes and new business regulations.

  • Myke

    A consumer tax isn’t a bad thing, if you get rid of the income tax. Promotes saving. Now if only there was a way to make a return on savings accounts.

    • I agree with you that replacing the income tax with a transparent retail sales tax might be a positive change. But this hidden, pryamiding sales tax, the IP 28 gross receipts tax, is awful.

      • Sasha Deal

        Charlie Hales may bales back to Bankoover from yEastmoreland … simply because of the tax results, no income taxes there and no sales taxes to dose who shop over here.

      • Myke

        Steve, given a fair percentage, a Value-Added tax can be good way to raise public funds. I totally agree with you. But, an Income tax OR a Sales tax. Hell be paid they, who have NO fiscal sense, actually get both.

    • MrBill

      Or maybe replacing property taxes with a sales tax? I could go for that.

      • Perhaps. We should at least have the discussion, and all agree that IP28 needs to go away.