Posted by I recently asked my LinkedIn network a thought provoking question. I asked: “When you attempt to solve problems, are you reacting to symptoms or addressing the root cause?”
Let’s put this question into a real life scenario. Say you have a new teenage driver in your household, driving a car you own. They have fallen into a driving style where they accelerate as quickly as possible when a light turns green, only to slam on their brakes up ahead at a red light. This style of driving leads to you having to service the brakes on your car well before the average life of brake pads. When you discover the root of the problem (your teenagers driving habits), do you continue to service the brakes more frequently than you should (addressing the symptom) or do you teach your teenager how to drive more prudently and tell them they will pay for any unnecessary brake service (addressing the root of the problem)? I am guessing you would do the latter.
Oregon has a special election this January where we will vote on proposed tax increases for some individuals (measure 66) as well as changes to the state tax code for most businesses (measure 67). I am voting “No” on both of these because, in part, I believe they treat the symptoms and fail to address the problem.
I am against both measures but I really despise measure 67, the tax increase aimed at businesses. Let’s review the facts and you’ll see why I am so adamantly opposed.
First, don’t believe the television ads that want you to think big corporations only pay the $10 minimum tax. If an Oregon corporation is profitable, it is paying substantial income taxes in Oregon. Nike, Les Schwab Tire Centers, Precision Cast Parts, Columbia Sportswear….these companies ARE NOT paying the minimum. Companies paying the minimum are those that do not turn a profit. Your locally owned sandwich shop or dry cleaners may not have turned a profit in 2009. Many small businesses don’t. These businesses don’t pay an income tax but they are still paying things like a payroll tax and property tax. These businesses are essentially paying for the opportunity to run a business that is not yet profitable. Measure 67 will make they pay even more for this right.
In addition to increasing the minimum tax on unprofitable companies, measure 67 does more damage. It changes the tax code and taxes some businesses based on sales, no profits. It increases the profit tax on Oregon’s largest employers by 1.3 percentage points. It is retroactive back 13 months. It increases many business paperwork filing fees…some will be doubled; some will be more than tripled.
Do any of these changes address the root cause of the problem or do they simply address the symptoms? I believe that the real problem is Oregon spending money irresponsibly, often spending more than it has. The symptoms are state agencies running out of money sooner than they should and the inability to run in the inefficient ways they are used to.
I read a story today that is a great analogy of what the Oregon legislature is asking us to do. It was about a women that upgraded to a more expensive apartment and leased a new car. Four months later she couldn’t afford the payments and asked her boss for a raise so she could meet the financial obligations she created. She was fired on the spot (from 48 Days to the Work You Love by Dan Miller).
Oregon voters are the boss and the legislature is the lady in over her head financially. Are we going to do what she asks or say no to her selfish demand?
I’ll close with one last anecdote. Recently I was debating these measures with another Oregon voter and he said something interesting. He stated something to the effect of “if the legislature would bring me (the voter) solutions to our problems without increasing taxes, I’d vote in favor of them.” I told him that he needs to tell his legislators to do just that. Something tells me that on January 26th he’ll mark “Yes” on his ballot for 66 & 67 but he won’t follow through with telling his legislators what he expects from them. Me, my “No” vote will be part of my message to Salem.
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"I believe that the real problem is Oregon spending money irresponsibly, often spending more than it has."
States can't deficit spend, and Oregon isn't.
The problem is the volatility of the income tax as a revenue source. Oregon has a lower tax burden for individuals and businesses than most other states, even after 66 and 67. Whatever causes Oregon's high unemployment in recessions, taxes are not it.
The income tax's volatility is the real underlying problem the legislature should fix.
You may need to get your head out of that dark place it currently resides in. Buisness having to pay more in taxes = cutting corners = cutting jobs. Or did you not learn that in Junior High math?
"Or did you not learn that in Junior High math? "
It's stupefying that you don't seem to realize this: Oregon has lower business taxes than most other states. Whatever causes high unemployment, our tax system is not it.
California is, but their credit rating is through the floor. I was referring to states not being able to deficit spend in contrast with the federal government, which can deficit spend without significant consequences, at least for awhile.
It is tough as any time to start a business IMO. The credit crunch has made banks put the squeeze on small business loans. People have to spend frugally, not frequenting local businesses as often. If Measure 67 passes, expect to see many of the mom and pop shops in your neighborhood call it quits and therefore more Oregonians jobless.
Unless the mom and pop shops in your neighborhood are incorporated, they won't be affected by these measures. Neither measure effects sole proprietor businesses, individuals making under $125k, or couples making under $250k. My guess is Jmartens clears more than that a year, has interest in someone who does, or has interest in a corporation in Oregon.
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"I believe that the real problem is Oregon spending money irresponsibly, often spending more than it has."
States can't deficit spend, and Oregon isn't.
The problem is the volatility of the income tax as a revenue source. Oregon has a lower tax burden for individuals and businesses than most other states, even after 66 and 67. Whatever causes Oregon's high unemployment in recessions, taxes are not it.
The income tax's volatility is the real underlying problem the legislature should fix.
I see what you are saying, fair point.
However, I am going to knit-pick a bit. Isn’t California deficit spending? It is issuing IOU’s for god sake!
In response to the person who said, other states have high taxes. That is no excuse!.. such a stupid argument. If everyone was jumping off a bridge? We need to focus on schools and cut out the rest of the crap. Oregonians are taxed to death already, 4th highest in the nation. What does that tell you? And we are supposed to be all earthy and cool… well, then let's be. And have the lazy asses get back to work, or find a new job, or make one of their own. This business tax and income tax kills the incentive to do that. NO on 66 and 67.
"Oregonians are taxed to death already, 4th highest in the nation."
You're just looking at the income tax rate. I was talking about the overall tax burden, which includes income taxes, property taxes and would include a sales tax if Oregon had one. By that measure, Oregon has lower taxes than most other states. If low taxes automatically mean more jobs, where are they?