Oregon's Death Spiral: Business Owners say "I'm Moving Out"

By Mike Shedlock

Global Economic Trend Analysis

January 27, 2010

On Tuesday, unions in Oregon won a charred earth victory that will drive already troubled Oregon, straight off the cliff.

Oregon voters passed Measure 66 which raises tax rates on individuals who earn more than $125,000 and couples with incomes greater than $250,000. Voters also passed Measure 67 which increases business taxes.

Please consider Oregon voters pass both tax measures.

Oregon voters on Tuesday approved tax hikes on businesses and the wealthy, allowing legislators to avert budget cuts they said would have affected schools and services for the poor and elderly.

The most recent reports had labor outspending business in one of the state's most expensive issue campaigns. Common Cause of Oregon said Guiney's group raised $6.85 million to the $4.55 million raised by Oregonians Against Job-Killing Taxes.

"The bottom line is the unions bought the election," said State Republican Chairman Bob Tiernan. "It's going to be a sadder day as more businesses leave the state and more don't want to come here."

Passage of the measures spares the Legislature a month of budget-cutting when it starts a four-week session Monday.

Mish:

Don't know if you noticed but Oregon narrowly passed another tax increase today. As a business owner for 25 years in Oregon, I'm moving out, going to Washington. Many other business owners I talk to are saying the same thing. They are all getting out. One of them refused to renew his commercial lease until seeing the results of 66/67 tax measures. He'll be moving out also.

Tektronix last year decided to get out as well, and they are moving 80% of what is left to Shanghi China. Many other companies have also left in the last couple years. Oregon will now be tied with Hawaii at 11% income tax, the highest in the US.

Moreover, they have added a tax now on gross revenue. It doesn't make any difference if you are losing money and trying to survive. They want to skim the top. Wasn't this the technique used by the Mafia?

If that's not bad enough already, the City of Portland is talking about massive tax increases. If you're a business in the city limits, the tax/business license fee has been 2.2%. They now want to increase it to 8%, a 400% increase. In that case, a business in the city limits of Portland will pay 11% income tax to the state and 8% income tax to the city: 19% city/state income tax, on top of the Federal 35% income tax.

Last year Oregon's unemployment was 12.5%, one of the very highest in the US. Two large Malls went bust in 2009 and there are entire blocks of empty retail locations. There is so much commercial space up for lease the FOR LEASE signs run up and down the streets everywhere.

One major decided he didn't like the number of signs and tried to pass an ordinance to restrict the signs. He said "It looks bad, like the city is going broke." His remedy: hide the problem.

One small company said it would have to terminate 2 more of their employees if 66/67 passed. That's just a sample. Oregon unemployment is headed much higher.

Regards, C.S.

Forty-six years ago, when Mark Hatfield was governor, I started a small business in Oregon. In our first year, sales totaled $8,000. I am proud that it eventually became a major employer in the state.

It has been my hope that other entrepreneurs would similarly pursue their dreams in Oregon. They won't. Measures 66 and 67 should be labeled Oregon's Assisted Suicide Law II. They will allow us to watch a state slowly killing itself.

They are anti-business, anti-success, anti-inspirational, anti-humanitarian, and most ironically, in the long run, they will deprive the state of tax revenue, not increase it.

The state in past years was headquarters for The First National Bank, US Bank, Pacific Power, Willamette Industries, Georgia-Pacific, Jantzen, White Stag, G.I. Joe's, Monaco Coach, Meier & Frank, among many others. They are now headquartered elsewhere, are controlled by non-Oregonians or no longer exist.

There are words to describe what we are doing with 66 and 67: It is called a death spiral.

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