In the classic Aesop fable “The Goose That Laid the Golden Eggs,” a family owns a hen that lays a single solid-gold egg once every day. Assuming the hen is filled with gold, the family butchers the hen with the hope of finding gold, but it instead finds the hen to be nothing more than an ordinary bird on the inside.
In the family’s attempt to gain a lump sum of gold, it kills its source of prosperity and ends up less prosperous than the family would have been if it had just left things as they were.
In November, Oregon voters will head to the polls to decide whether to punish the very people employing over 83 percent of the state’s 1.8 million people with jobs: businessmen and businesswomen in the private sector.
If voters approve the proposal, called Measure 97, businesses that employ Oregonians and earn more than $25 million a year would be forced to pay over $30,000 in taxes for the mere privilege of existing in Oregon, a form of taxation called a “gross receipts tax.” Businesses would also be required to pay additional taxes under the plan for revenue earned over the $25 million threshold.
Instead of voting to discourage businesses from making consumers happy and providing services they demand, Oregon voters should reject this destructive proposal and push to make the state friendlier to entrepreneurs and job creators, which would create a better state for everyone.
When one gets down to it, increasing the cost of doing business does not really increase burdens on businesses. Instead, as with all business costs, increased business taxes are simply passed along to consumers. For them, the effects of hiking business taxes and sales taxes are nearly indistinguishable.
Nicole Kaeding, an economist with the Tax Foundation’s Center for State Tax Policy, writes the state government’s own projections acknowledge everyday consumers will pay the price for government’s quest for more money.
“Oregon’s Legislative Revenue Office (LRO), a nonpartisan legislative research service, released its analysis of M97 on May 23, attempting to quantify the revenue and economic effects from the tax change,” Kaeding wrote. “By 2022, LRO predicts that prices would increase by 0.9 percent. In the abstract that increase might seem small, but an increase of 0.9 percent represents almost $2 billion in additional consumer costs.”
In addition to hurting consumers, the proposal is based on unfair tax policy. A hallmark of a fair tax policy is maintaining the offset between businesses’ use of government services provided by the jurisdiction and the amount of taxes paid by businesses for those services. In other words, businesses and people with a physical presence in a jurisdiction benefit from government services, so they should pay for those benefits. Entities outside a jurisdiction do not consume a jurisdiction’s services, and therefore, they should not be charged for those services. Likewise, the employees of those businesses being taxed will not have a say in how they are taxed, because they don’t live in the taxing jurisdiction.
If voters approve this cash grab, businesses not located in Oregon who sell to consumers in the state will be forced to pay as though they are located there.
Driving up the cost of everyday living in the Cascade State and grabbing money from people unable to vote in Oregon is not the way to keep the golden eggs coming. Instead of cutting the hen open and increasing the costs of doing business in the state, Oregon should make it easier for business owners to deliver goods and services Oregonians want and make it easier for Oregon consumers to live and enjoy life in the state.
— Jesse Hathaway (email@example.com) is a research fellow with The Heartland Institute.