Sprenger should know better on taxes

Two legislative bills have been referred to the ballot for a special election in January 2010.  Both are tax increases – one on individuals and one on corporations.  Both are relatively small increases; the personal income  tax increase is marginal and only applies to people making above $250,000, and the corporate tax reforms, while a bit more complicated, still leave Oregon near the very bottom nationwide in business taxes (see here for more).  Both increases were proposed as part of a package of cuts and other measure designed to craft a workable Oregon budget in light of the faltering economy.  Both are pretty darn progressive.

And yet Sherrie Sprenger opposed both of them.  Check out the logic:

Rep. Sherrie Sprenger (R-Scio) voted no on both tax bills.

“I am very concerned about the negative effects these increases are going to have on small businesses in my districts,” Sprenger said. “Especially in my district, small businesses employ the vast majority of folks.”

Sprenger said she thinks it is a “very real possibility” these taxes would cause layoffs.

Both the governor’s office and the Department of Revenue saw increased budgets, Sprenger said.

Let’s unpack this a bit.  Yes, some small businesses are going to see a tax increase – the new corporate minimum for most corporations is going to be $150 a year.

A year.  Frankly, that’s not a whole lot.  Yeah, it’s a big percent increase from the current minimum of $10, but a $10 minimum corporate tax is completely ridiculous – it hasn’t been changed since 1931.

The other proposed change to corporate taxes is the rate paid on corporate profits made above $250,000.  I don’t know what Sprenger’s definition of a small business is, but I’ll assume she doesn’t include businesses with $250,00 in profit (not sales) as small businesses, then she’s being a bit disingenuous.

Given the tax increases, I want to be charitable and say that the minimum increase is really what Sprenger is referring to when she says she’s worried about the increases.  And even then, you know what?  If Oregon businesses – who are already paying the second-lowest corporate taxes in the nation, on the whole – can’t survive this kind of increase, maybe the problem isn’t the taxes.

There is one more statement from Sprenger that I want to address:

“Just like in our household budgets, the state needs to prioritize and decrease spending before it increases the tax burden,” she said.

This is actually what caught my eye first in the story.  Why?  Because it’s a stupid talking point and she should really know better.  Let me say this really slowly:  The state is not like a household.

Again, for good measure:  The state is not like a household. A household?  Private.  Small.  The first line, financially, of keeping a few people afloat.  The state?  Public.  Large.  The last line, tasked with fundamentally making sure everyone has certain minimum levels of financial and other security (the more original interpretation of the welfare state).  And when times get tough for households – i.e. when the economy is doing so well – the state is supposed to step in and help people survive and recover.  The state can’t do that when it can’t fund basic services like police (funny, since Sprenger used to be a sheriff), hospitals, education and others.  When the state’s short money, it – meaning state legislators – are tasked with figuring out what to do, to either cut spending or raise taxes or try and find another solution.

This time around, the legislators did both.  To cover the shortfalls, cuts were made, stimulus money was received, and tax increases were proposed.  Small, progressive tax increases.  And yet Sprenger wants to forgo those tax increases?  I think that’s bad public policy, but that’s her choice.  What I don’t think is OK is using a false, stupid talking point to do it.  I’m disappointed she is misleading her constituents about the role of the state government, and I hope she doesn’t actually believe what she’s saying, but I’m not sure which is worse.

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