Oregon’s Tax Hike: Unnecessary and a Bad Idea

Excutive Summary

On February 3rd Oregon’s voters will decide whether to pay $1.1 billion more in taxes. According to the State of Oregon’s Legislative Fiscal Office, the total adopted budget for the 2003-05 biennium is $37.081 billion, a 7.2
percent increase over the 2001-03 budget of $34.605 billion. That is an increase of $2.476 billion, despite talk of the budget being cut to the bone.

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Everyone in Oregon will pay for the $1.1 billion hike—which comes to $825 per household. Income taxes will be raised, seniors will lose valued medical deductions and face higher
taxes, property tax liabilities will increase, small and large business will pay more taxes if they choose to stay in
Oregon, smokers will continue to pay higher taxes, and incentives for businesses to establish headquarters in Oregon will be diminished.

Joining businesses like Louisiana-Pacific and Gardenburger
who have already left Oregon will be other companies who have already said they would take new factories and jobs
to other states.

Under the leadership of former Gov. Kitzhaber, Oregon’s government spending grew faster than any other state
in the Union. During his first term, spending increased by nearly 30 percent. Between 1989 and 2003, the state’s
general fund budget increased by 151 percent. The tax hike currently being proposed would cement these wasteful
indulgences into Oregon’s budget.

Compared to other similar states, Oregon already spends 19 percent more than would be expected, with no discernable
improvement in the quality of services. Other states are avoiding tax hikes by reducing excessive spending.

This paper outlines 10 money-saving options for Oregon. If Oregon ignores these pro-growth options, it will face the
same problems as those states that raised taxes during the recession of the early 1990s: fewer jobs, more budget
problems, and slower growth. This would spell trouble for Oregon, which already has the highest unemployment rate in the country.

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