Thanks, honestly I'm trying to understand it. People always bring their own personal agenda to this kind of stuff and I've been trying to really figure out if our state is wasteful, underfunded, overtaxed, etc...it's not nearly as clear-cut as I hoped when I started looking at it. I had always assumed that Oregon was suffering because of a low property tax rate...because that's what I'd read a while ago, but I'm not seeing it in the numbers. By the same token when people say how overtaxed Oregon is, I didn't see that either... I'm just confused...
The interesting thing to me is that businesses generally try to sell to consumers on something other than price. If you sell a laser printer, you add in different features so that it's impossible to compare apples-to-apples with other laser printers. You do what you can to add value to the product so you are selling quality rather than the bargain basement deal, because there's always somebody else out there who will lower their profits even more than you. For every Walmart, there are a hundred different boutique stores that compete based on specialization, quality and overall value. And for every Walmart there are a lot of businesses that fail because they just can't quite cut their prices as much as Walmart does. Yet when we discuss "favorable business environments," it's always about taxes. In other words, what is the state government's price for doing business in a particular state. Does our state offer a lower bargain basement tax rate than the next state? If not, we'd better or all our jobs will go over there! Instead, we should run our state governments more like businesses when it comes to thinking about taxes. If a state has very little to offer in educated workers, nice work environment, logistic advantages like quality ports and highways, a good education system, etc, then yes, you should race as quickly as you can to the bottom of the barrel on tax rates and market your state as the Walmart of tax rates. But keep in mind there can be only a couple of Walmarts in any market, and if somebody else figures out how to do it even cheaper (like, say, in India) well it sucks to be you. Because you cut profits without gaining customers. But if your state has a lot of innate advantages, as Oregon does, then it's really not in Oregon's best interests to be the low-cost leader in corporate taxes. The key is to invest the premium you charge in taxes on things that are worthwhile, investing them in the future of the state. And that's the real issue. Are the corporate taxes Oregon charges adding value to the state that will attract more businesses, or are they wastes of time and effort (as cited in BP's original post)?
A large portion of poor people's income (and that of the middle-class, for that matter) goes to pay for housing and utilities, which are non-taxed expenditures. Further, many states' sales taxes don't apply to food purchases, further limiting the impact on lower-income residents. In reality, the rich spend a higher percentage of their income on taxable items than the non-rich do, so it's actually more likely to end up progressive rather than regressive.
I was intentionally avoiding the non-taxable aspect just because it gets complicated...while it's true that some things are usually exempted...whether it's progressive or regressive is determined on each individual's spending habits rather than broadly based on their financial standing...so it is unevenly applied...sometimes widely so. Also, it is more regressive than the standard income tax. There is a minimum threshhold for taxation of income, there is no minimum threshhold for Sales tax. So the very poor that aren't subject to income tax will end up paying sales tax...so that aspect is definitely more regressive. So in some cases if you factor in everything it might still be progressive, but much less so than income taxes.
Fantastic research, Blazer Hippie. I've been asking for a non-blog link to answer 2 questions, and you answered the first, partially. Complaint 1) I heard on a conservative blog that Oregon has the 4th highest tax burden! So do Washington and Idaho! My response 1) What is the ranking of states by taxes, including the half which are better than average, not just the ones which are worse? (Your source ranks states by business taxes only, but it's the best source anyone's come up with yet.) Complaint 2) I heard from my friend, the alcoholic restaurant owner, that my state is losing 10,000 jobs (alternative dollars version: its economy is losing $50 billion) due to the 0.1% tax increase! He's moving his greasy spoon to Kansas and we should all be sorry! (alternative layoff version: He laid off someone he was going to lay off anyway, due to his incompetent business ability, and eased his conscience with the tax excuse.) My response 2) What is the list of states with the number of jobs lost for each state (or gained, for half of them), and the amount of money damages to the economy, due to taxes causing business owners to move?
Yes, there are 2 other issues. In other decades, the issues have been law and order, and military readiness. Year after year, decade after decade, these are the 3 things that Republicans talk about. Now that we're temporarily all warred out, and mandatory sentencing guidelines have made 1/4 of all men a felon (1/2 in Michigan), all that's left for today's Weekly Outrage is taxes. The idea is to fight social progress and keep pushing backward, backward. Kill, imprison, and stop any common efforts like the few good things that government does.
Interesting. What would you call "social progress"? Would it perhaps mean a greater role for government, increased regulation, a greater tax burden and less freedom? Because that sounds like progress I could do without.
BTW, we shouldn't kid ourselves. It's mostly about the kind of profit you can make, which has to do with taxes and their impact on the bottom line. Most states offer some kind of economic assistance if you're going to bring jobs into the state; Oregon increases the tax burden. Great strategy. As for the "educated workforce". if you can't find the kind of workforce you want, you import people. In this economy, people will move anywhere for jobs. I keep hearing that Oregon has this really business friendly economy by most in here. If that's the case, how does one explain the 11.0% U3 unemployment rate, which is 1.3 percentage points (or 11.8%) higher than the national average? Furthermore, the recession has been deeper and longer in the Beaver State for any other state not named Michigan. http://www.qualityinfo.org/olmisj/OlmisZine We've seen an exodus of jobs going to places where they actually don't treat profit as something illegal to be confiscated.
I don't know if I want to see it, but I think sales tax is a very fair way to tax people. It promotes savings and taxes people hard who have the ability and buy a lot of luxury items. I think of vehicles alone and the amount of tax the "real wealthy" would get taxed alone on vehicles. (Of course I would make it complicated and have exempt items, with higher taxes on vehicles over 50K). But what better way to tax . .. the more you spend, the more you pay tax. Plus think of all the tourist that come to Oregon that we could tax. That is millions of dollars in tax money we can get from people outside the state.
I think tourism would drop if we had a state sales tax. Maybe not by 25% or so, but still 10-15% should be expected. I like a flat tax where every person pays the same. No deductions...
I don't know if tourism would drop... I know sales tax as never factored into my vacation plans. Flat tax is interesting to me because I hate the IRS and the complicated tax laws... and it may bring tax rates on the rich inline with the rates of us. from http://www.timesonline.co.uk/tol/money/tax/article1996735.ece
