Oregon Versus the Laffer Curve

By Larry Huss,

Last Saturday’s Wall Street Journal carried an interesting column (Britain vs. the Laffer Curve) regarding the extraordinary economic difficulties that Great Britain has caused for itself, and why its progressive parties (Labour, Greens, Socialist Democrats, and the Socialists of England and Wales) are unlikely to change course to avoid a disintegrating economy. As I read the article, I couldn’t help seeing the impending demise of the Oregon economy on precisely the same basis.

But first, a little background and definition. For those of you forced to endure a teachers’ union-led education in the Portland Public Schools, the Laffer Curve is best defined by Economics Help—basically Economics for Dummies:

“The Laffer Curve states that if tax rates are increased above a certain level, then tax revenues can actually fall because higher tax rates discourage people from working.

Equally, the Laffer Curve states that cutting taxes could, in theory, lead to higher tax revenues.”

It may seem counter intuitive, but it is in keeping with regression analysis. While considered to be a theory, it has worked in all five instances when taxes were lowered and tax revenues subsequently increased. This occurred when deployed by four different presidents: John F. Kennedy (D), Ronald Reagan (R), George W. Bush (R), and Donald Trump (R)—the latter doing so twice.

The flip side has also proven true: where taxes are increased above a certain level, total tax revenues decrease. In fact, that is exactly what has been occurring in Great Britain and what gave rise to the editorial in the Wall Street Journal:

“The Laffer Curve comes for us all in the end, and man is it attacking the United Kingdom with a vengeance now. The latest immigration data suggest Britons are voting with their feet against rising taxes.

Migration figures for 2025, released Thursday by the Office for National Statistics, showed the lowest net immigration since Covid, at 171,000. Prime Minister Keir Starmer’s Labour Party is eager to trumpet a rapid decline in new arrivals, given how contentious immigration policy has become.

But an equally important part of the story is increasing net emigration by Britons. While the number of people leaving has held steady at some 250,000 annually in recent years, the number of people who repatriate each year is declining noticeably. This is down to 110,000 in the most recent year, from as much as 170,000 annually in the wake of the pandemic*.

The stereotypical British émigré used to be the retiree packing up for sunnier climate in Spain or France. These days it’s the younger worker who moves to Dubai for lower taxes and then delays returning to Britain. These are some of Britain’s most entrepreneurial people, and they’re spending their prime tax-paying years out of the country.

They’re in good company. The annual ‘rich list’ of Britain’s wealthiest, published last week by the Sunday Times of London (owned by the same company as the Journal), found a race for the exits. One-sixth of the people on the list two years ago have dropped off, and 111 of the British citizens on the 350-name list live offshore.”

I apologize for the length of the quote, but it reflects precisely what is going on in Oregon and particularly Portland. Taxes continue to increase, and the number of people paying those taxes continues to decline.

Look, Oregon has made tax increases an art form. In virtually every case where the city, county, or state has implemented a new tax or increased an existing one, liberals, progressives, and socialists have given assurances that the burden of the tax will only fall on the wealthiest, costing the majority of voters nothing***. While the United States was founded on the principle of “no taxation without representation,” Oregon’s liberals, progressives, and socialists have turned that concept on its head and implemented representation without taxation.

But this wasn’t the case in the last instance—the massive gas tax increase, which was soundly defeated by nearly eighty-six percent of voters. This defeat occurred despite Governor Tina Kotek, the Democrat-dominated legislature, antics delaying the ability to collect signatures on the people’s petition, and even moving the vote to the primary election where they assumed voter turnout would be light. People do not like taxes, and when they cannot see a valid reason for them, they will say no. When they are not given the right to say no, they will vote with their feet—just as they have been doing in Great Britain, and are currently doing in America’s major cities and one-party dominated states.

Like in Great Britain, it isn’t just the expatriation of the wealthy; it is the influx of their replacements. Those who have left Oregon, including me, have taken their wealth, their incomes, and their businesses with them. The stream of income that was once available for the Oregon government to waste is diminishing. Those who leave are being replaced by the unemployed, the homeless, the drug and alcohol-addicted, and those who can only remain employed if their employer is the government. In other words, those who provide the funds for governance are leaving, while those who increase the cost of governance are not only staying, but growing in number at a steady rate.

You are not going to see any discussion about this economic certainty until it is too late, for several reasons.

• First, members of the media are, on average, economically illiterate—as are the progressive members of Oregon’s legislature.
• Second, it runs contrary to their basic belief that everything you earn belongs to the government, and that the government will let you know how much you are allowed to keep. It is socialism through the back door.
• Finally, to remain in power, progressives need to increase the dependency of the masses on government largesse. It is the left’s guiding principle: they are more than happy to spend your money on their great ideas, particularly if there is no accountability or responsibility for success.

Having deserted their traditional base of working men and women (particularly private-sector unions), Democrats need to rebuild their base. They have opted for dependency as the glue that binds them together: immigrants (legal and illegal), public employee unions (including teachers and school personnel), welfare recipients, those addicted to drugs and alcohol, and sexual outliers.

They are way ahead in their goals, but they are only hastening the effects of the Laffer Curve and accelerating the exit from Oregon.

* This means that those immigrating to Great Britain (primarily from Africa and the Middle East) are staying and not returning to their countries of origin and Brits leaving Great Britain are no longer returning.

** Washington, Los Angeles, New York City, San Francisco, Minneapolis, Chicago, ad nauseam.

*** In most instances, those assurances have proven to be written in the wind, as the increases regularly fall heavily on the middle class.