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This week the Democrat co-chairs of the Ways and Means Committee announced their budget plan. It includes an $800 million tax increase on the “wealthy”. In reality the tax is a job killer, a massive increase targeting small and family businesses. All in a time when Oregon has 12 percent unemployment, the second highest in the nation and still growing.
According to House Speaker Dave Hunt (D- Clackamas County) the budget keeps the promise Democrats made to voters “…that we provide a fair and balanced approach that shows we are tightening our belts and does not balance the budget on the backs of middle class Oregonians or those that need our help the most…” But that is exactly what the co-chairs’ budget does: it punishes the middle class for pursuing the American dream. The irony is that while the Democrats raise taxes on small and family businesses they are giving tax credits to their political friends and large corporate entities. Moreover they are expanding the state budget by an astounding 9 percent this biennium.
The tax increase punishes the middle class with a 22 percent increase in taxes on small and family businesses. It raises taxes for the top 10 percent of income earners (filers), which are married couples making over $250,000 per year combined or individuals making over $125,000 per year. Typical of the Democrat leadership to target a perceived minority with a massive tax increase. They also rely on the fact that most Oregonians have no idea that over 65 percent of those filers are small and family businesses that are struggling to survive and keep their few employees employed. They cannot absorb a 22 percent increase in their taxes.
This tax is a massive job killer that hits small and family businesses the hardest. Those small businesses are the engine of Oregon’s economy and their success is crucial if Oregon wants to climb out of its current recession. The more they have to send to the government, the less they will have to spend on creating new jobs—or paying current employees.
There are 31,000 filers that are impacted. Of the 31,000 filers 20,000-21,000 are small businesses, LLC, S corps or partnerships that report their income on K-1 reports. Another 6,000-8,000 filers use a schedule C and are sole proprietorships, which is typical for many family farms and small businesses. That means of the 31,000 impacted filers 26,000-29,000 of the 31,000 filers impacted are what are called “pass-thru entities”. This tax increase hits the middle class and those that who need the most help today, small and family businesses.
It is sad that the current Democrat leadership in the House and Senate and the Governor are so short sighted that they are prepared to increase job killing taxes on the engine of Oregon’s economy, in a misguided effort to reward those that eat at the public trough. At a time when many of us are trying to find ways to spend less, this tax increase will allow Oregon’s politicians to increase state government spending by an astonishing 9 percent in the next biennium. At a time when Oregon families are seeing no increase in the personal income and many are struggling to make ends meet.
What they should do is cut wasteful and unnecessary spending, encourage economic growth by reducing barriers to market entry and providing tax relief to hard working families and small businesses, and reform state land use regulations that create huge obstacles to economic development.
Oregon needs more jobs, not more job-killing taxes.