Last year, Oregon citizens approved large increases on business and consumer income. Now their problem is worse. The Oregon Business Report has a piece today by Patrick Emerson:
The Office of Economic Analysis blog has a nice picture that does a good job describing the torpedo the good ship Oregon took to her hull.
This is net receipts from February though April for the last 14 years. Note how Oregon is $400,000 in the red in 2010, meaning we refunded $400,000 more than we took in during that period, and this is with 66 and 67.
What is going on?
…preliminary numbers show that the biggest culprit was capital gains. Following a 60 percent decline in capital gains income from the 2007 tax year to the 2008 tax year, we were expecting an additional 10 percent decline for the 2009 tax year. This was in line with what many other states were projecting (5 percent to -20 percent) based on an informal survey conducted early last winter. Unfortunately, preliminary estimates show that capital gains income likely dropped at least another 50 percent for the 2009 tax year. Going forward we believe that we will see an uptick in capital gains income, but carry forward losses and low levels of business transactions will limit growth.
The tax increase was supposed to solve Oregon’s problem. It did not. Proponents will blame the economy, but people respond to incentives. These results were predictable. In fact, we warned Oregonians about this in January.
You can’t tax yourself to prosperity.