Oregon to Soak the Rich

Oregon is raising taxes on the wealthy and corporations:

Measure 66 increases Oregon’s personal-income-tax rate by two percentage points for households earning over $250,000 a year. Measure 67 calls for an increase in the state’s minimum corporate income tax, currently $10 a year, and imposes a tax on gross revenues for corporations that don’t report a profit.

The philosophical arguments against this should be familiar: taxation is coercion, more government means less liberty, and that wealth is rightfully earned by Oregonians. Here are a few economic arguments why this is a bad idea:

  1. The impact of the tax will not be limited to the rich. Taxing corporations means fewer jobs, higher prices, and lower wages for employees.
  2. Increasing taxes makes it more likely for productive people to go to other states. For example, my state, Washington, is right next door and has no income tax. This makes it more likely that corporations will move out of Oregon, and less likely that corporations will move to Oregon.
  3. It’s not likely the state will do anything useful with the money anyways.
  4. We’re in the middle of a recession, and the last thing you want to do is raise taxes.
  5. By increasing taxes on the rich, Oregon has become more dependent on the rich as a source of revenue. However, the rich are a volatile source of revenue (they last the most in the recession). By shifting more of the tax burden on to the rich, Oregon’s revenue becomes less stable.
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