The Oregon Trail

By John at January 27th, 2010.

Democrats and the interest groups feeding at the public trough were quick to look south with a smile today, and a glimmer of hope undoubtedly twinkled in their eyes as Oregon voters approved Measures 66 and 67.  KIRO’s Dave Ross thinks this may send a message, but I think the details may tell another story.  At the very least, Washingtonians should give serious thought to what the Oregon vote portends here.

Measure 66 raises the state income tax on households earning more than $250,000.  Washington lawmakers have no such option, in all practicality.  Given national trends, majority Democrats in Olympia are unlikely to pass a high-earners income tax this year and income taxes in general have major electoral hurdles to overcome in Washington.  Recent political events compound that problem for Democrats.

The left does, however, however, realize that this idea has the best prospects in the long run.  Why?  Because it’s easy to convince people to increase taxes they don’t have to pay.  That’s the problem with a progressive tax structure–you’re giving people all sorts of free goodies while promising most voters that some other person will pay for it.  The “rich” are a convenient target for the left, which loves to use “values” as a pretense for plundering from the profitable (try talking about “values” in any other context, however, and you’re promptly scolded for trying to impose your views on other people).

Measure 67 raises minimum corporate taxes and increases taxes on “upper level” profits.  Again, this is much more difficult in Washington.  Washington’s Business and Occupation Tax is a tax on gross receipts, so even if your company doesn’t earn a profit the state still gets its cut (how’s that for values?).  Small businesses suffer under this the most, which is why lawmakers are reluctant to raise it because the impact is broadly felt and not just targeted to faceless wealthy corporations that are easily demonized.  Targeted B&O increases could be an option, but the larger companies in Washington would likely put up a strong fight.

Based on conversations I’ve had with some Democratic legislators in Olympia, I think some of them realize that you don’t encourage private sector growth by raising taxes on the very businesses you want to create more jobs.  Oregon’s unemployment rate has been running higher than Washington’s, and the passage of Measure 67 isn’t going to help.  Taking a cue from Tony Soprano, Oregon voters just sent a message to Oregon businesses:  “Grow, and we’ll take a bigger cut.”  There are enough moderate Democrats in Olympia and enough commonsense voters in Washington who know better.

Another factor to consider is Oregon’s odd political landscape.  As Floyd McKay pointed out in a recent Crosscut article,

Oregon is weirdly counter-cyclical in terms of its politics. When I first began covering Oregon politics, Barry Goldwater had just driven the Republican wagon into the ditch in his 1964 presidential campaign and Democrats were resurgent everywhere. Except in Oregon, where Republicans overturned Democratic control of the Legislature and began nearly a decade running the Oregon House. … As Republicans surged in the Reagan years, Oregon became a solidly Democratic state, controlling both houses of the legislature and beginning in 1986 a line of Democratic governors that continues to this day. Republicans recaptured the Oregon House during the Clinton years, and during the administration of George W. Bush Oregon’s Democrats were firmly in control. Oregon seems to swim against the tide.

The Oregon Trail is uniquely Oregonian.  Politicos thinking they can replicate the Measure 66 and 67 vote here in Washington this year should think long and hard before trying.  This is not to say such efforts would surely fail (the internet is clogged with political predictions that didn’t come true), only that what happened south of the Columbia River yesterday doesn’t necessarily mean Washington voters would take the same route.

Tags: featured, Measure 66, Measure 67, Olympia, taxes

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