Jeff Newgard
Newgard is the owner of Peak Policy, LLC, a government affairs and policy consulting firm specializing in tax and regulatory matters. He lives in Tigard.
Too many Oregonians believe the dream of success is slipping away. Although their wages continue to rise, the ladder of economic opportunity is pulled away from them as inflation eats away at those gains. Unfortunately, it’s likely to get rougher before things smooth out.
In late May, Oregon’s economists outlined a rosy revenue picture for the state’s short-term budget, but if you look under the hood, the future for the people it serves seems rather bleak. Oregon’s surging tax collections are temporary, driven mainly by individuals selling stocks and businesses. The transitory nature of windfall revenues distorts the more dire outlook that could be right around the corner.
In one of the outlined scenarios, the economists describe a “moderate” recession where the state loses 100,000 jobs and the unemployment rate spikes back up to 9%. Since Oregon relies heavily on income taxes, the recession stings particularly hard for state programs and services. Our leaders would need to manage a steep drop in government resources, to the tune of $2.6 billion, after spending years flush in cash from enhanced federal funding and booming revenues.
It’s only a matter of time before the next downturn strikes. Will Oregon have a game plan to tackle its challenges?
Across the country, states are working to position their economies for the next recession by making their tax codes more competitive. They are working to advance tax reforms to entice new investment and lure individuals and businesses from other states. It’s not just deep red conservative states trying to cut or eliminate taxes. Among the 14 Democratic trifecta states—that is, states with Democratic-controlled legislatures and governors—Oregon is one of only a few states to not at least seriously consider a pro-growth economic strategy, based on a review of state tax legislation, press statements and local media coverage.
In Oregon, it’s the same old tax agenda every year. Businesses are finding themselves in a perpetual cycle of fending off the latest threat of a new or increased tax either directly on business or individual income. And it’s not just state government. The city of Portland, Multnomah County and Metro all raised and created new taxes over the last few years, driving the area’s combined state and local marginal tax rate to the highest in the country, at 26.19%, according to the Tax Foundation. While other states are seeking to lure companies from elsewhere, Oregon is all but asking businesses to leave.
It didn’t use to be that way. In past decades, Oregon’s state and local leaders fashioned an economic vision designed around growth to raise the standard of living for all Oregonians. They led the nation in policies that rewarded businesses who invested locally and placed a greater share of the tax burden on those who invested elsewhere. That mindset drove immense growth and investment, not just for the private sector but for the state and the people it serves.
If we want Oregon to give every individual and family an opportunity to get ahead, we need to reclaim an economic mindset that doesn’t hold the economy back. Our leaders should prioritize policies encouraging investments in Oregon and its people and seek to eliminate barriers currently standing in the way.
As the election season heats up again, I hope every candidate is eager to embrace a pro-family, pro-growth economic vision restoring the promise that Oregon’s best days are ahead.
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