Some frankly amazing, to me anyway*, news out of Oregon on Tuesday. The Oregonian reports:
It looks like Oregon corporations and high-income earners will pay higher state taxes as voters weighed in Tuesday on two hotly debated measures. […]
Measure 66 raises the income tax paid by households earning at or above $250,000 a year or individual filers who make $125,000 or more.
Measure 67 raises the state's $10 minimum corporate income tax. Together they generate an estimated $727 million, which has already been budgeted by the 2009 Legislature for public schools and other state services.
The tax measures were strongly supported by the state's teachers and other public employee unions. They argued that schools and public services would face damaging cuts.
A coalition of Oregon businesses, including the state's grocers, mounted a campaign to defeat the taxes, arguing that they would cost jobs at a time when the economy is already struggling.
*Not always the best guide to what is actually amazing.
More analysis after the jump…
This is a welcome bit of clarity out of the Beaver State after the muddled message of last week's Senate election in Massachusetts. Measures 66 and 67 will reduce the regressive nature of Oregon's state tax system (PDF), in which the poorest 20% of Oregon families, those making under $18,000 a year, pay 8.7% of their income in state and local taxes, while the top 1% of families, those making more than $417,000 a year, pay a state and local tax rate of 6.2%.
Unemployment in Oregon peaked at a crippling 12.2% back in May 2009 but has since fallen back to a still-completely-unacceptable 11%. Without this rebalancing of the state tax code, that unemployment rate would likely have gone higher as state and local governments shut down services and shed employees.
Raising income taxes on the wealthy — instead of relying on the usual solutions of lotteries, casinos, or sales-tax hikes — is the fairest, most effective way to raise revenue while protecting jobs and vital public services like schools and health care. The political default position is always against higher taxes (after all, no one wants to pay higher taxes, other things being equal). It is never an easy matter to rebalance a tax code, even in good times. For progressives around the country facing state budget shortfalls and cuts in vital public services, the Oregon story ought to be investigated and the relevant lessons learned.
Thanks to YW Chong for the pointer.