Oregon’s corporate loophole lobby’s scaremongering about Oregon’s tax rates have been unfounded, and this morning’s state economic forecast should put the arguments to rest.
The May 2011 Economic and Revenue Forecast provides yet more confirmation that Oregon lawmakers should ignore the calls by the corporate loophole lobby — and their friends in the legislature — to give speculators preferential tax rates on their income from capital gains.
Still mad at voters for their strong support of Measures 66 and 67 in January 2010, the corporate loophole lobby has been painting an ugly picture of Oregon’s economy in making their case for special treatment.
But the economic forecast shows that, by several measures, Oregon’s economy has outperformed that of nearly all states and has been tops in the West.
One such measure is the “State Coincident Index,” produced by the Federal Reserve Bank of Philadelphia. The May 2011 Economic and Revenue Forecast explains the State Coincident Index this way:
Each month the [Federal Reserve] bank compiles and indexes data for each state that combines nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and real wage and salary disbursements. As a coincident index, the data is designed to report current economic conditions on a monthly basis, and is not a leading or a lagging indicator.
How did Oregon fare in this economic index? Over the last year, the Beaver State outperformed all Western states and nearly all other states:
Outside of Oregon, all other western states underperformed the U.S. average over the past year. Oregon’s index, after growing slowly through the first half of 2010, has turned strongly positive in recent months. Oregon’s 4.6 percent growth in the past year betters all other western states and also the U.S. average. Oregon’s quarter-over-quarter growth ranks fourth best nationally, Oregon’s year-over-year increase ranks fifth best nationally and Oregon’s five year percentage change ranks thirtieth best nationally.
How about when it comes to jobs? Again, Oregon is among the best performers nationally and, by one measure, beats out all other Western states. As Oregon state economists explained,
Oregon’s strong job gains in recent months have the state ranked seventh best in the country in year-over-year percentage change for the month of March.
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Now that each state has registered positive employment gains, at least for one recent quarter, Oregon’s gains have outpaced both the national average and all other western states.
Thus, the latest economic report undercuts the argument that Oregon needs to give wealthy speculators tax cuts in order to boost Oregon’s economy. The report is one more piece of evidence that with our current tax rates and no loopholes for investors we’re doing well compared to other states.
The data also confirms that there’s no good reason to allow the tax cut for the wealthiest Oregonians written into Measures 66 to go forward.
The 2009 legislature wrote the tax cut into the law that eventually became Measure 66. So on January 1, 2012, the state’s top income tax rates are scheduled to drop from 10.8 and 11 percent to 9.9 percent. That’s a 10 percent tax cut on the taxes owed on couples’ income in excess of $500,000, and an 8 percent tax cut on the taxes owed on their income from $250,000 to $500,000.
The legislature scheduled that tax cut at a time when state economists were projecting a less severe recession and a faster recovery than what actually took place. At that time, the legislature thought that revenue for the 2011-13 biennium would be almost $2 billion more than what state economists now predict.
By stopping the scheduled tax cut for the well-off, the state would be able to avoid some of the cuts to education, health and human services and public safety that will otherwise take place. That’s precisely what Oregonians wanted when they voted for Measures 66 and 67.
Thus, Oregon lawmakers should help protect middle-class and vulnerable Oregonians by saying “no” to new tax loopholes for the wealthy and stopping the tax cut for the well-off, who will continue to do just fine.
And lawmakers can do so with great confidence, because the May forecast reconfirms that Oregon’s economy is does well with our current tax rates and no special treatment for speculators.
This post was originally published on www.blueoregon.com on May 12, 2011. The original post can be found at http://www.blueoregon.com/2011/05/state-economic-report-undercuts-loophole-lobbys-call-special-speculator-tax-cut/.