The recent “How did we get here?” news article said, “Oregon’s budget depends predominantly and unpredictably on income taxes,” making planning ahead very challenging. That is understandable given the ups and downs of personal income during business cycle fluctuations. It should be noted, however, that spending has much less variation during these economic ups and downs, and, therefore, would provide a more stable source of income for the state if it were taxed.
Enter The Fair Tax, a tax on consumption. Not to be confused with the usual sales tax, The Fair Tax, as outlined in HR25, a proposed national tax on consumption, makes provision for low income persons and, due to a “prebate” provision, turns out to be a progressive, graduated tax that increases as spending increases. Current taxpayers would pay less because it enlarges the tax base.
If state legislators promised Oregon voters that all income taxes would be eliminated, it is just possible that a law of this type would be acceptable to those who traditionally have voted against anything that looks like a sales tax. A Fair Tax law should be considered for Oregon as a replacement for the state income tax.