Oregon Democrats and Republicans are dividing along classic ideological lines in response to the state's calamitous predicted budget shortfall.
A forecast released this week found that Oregon will have $261 million less in the current biennium than the 2007 legislature anticipated. In the 2009-11 biennium things will get a lot worse - a $1 billion shortfall.
Chuck Sheketoff of the progressive Oregon Center for Public Policy, writing on the BlueOregon blog, says the situation "is a revenue crisis, not a spending crisis." His prescription: Raise taxes on rich individuals and corporations.
"The most effective policy for raising revenue in this recessionary context is get revenue from those with the greatest ability to pay - both wealthy individuals and large, profitable corporations," he writes. "That's where the money is. A tax increase on very wealthy individuals, who are best able to ride out the economic storm, would tap money that would more likely be saved rather than spent."
Sheketoff doesn't pass up the chance to take a shot at one of his favorite targets, the state "kicker" law: "The current budgetary predicament reveals the foolishness in letting Oregon's kicker law send $1 billion back to taxpayers. A year ago, Oregon's kicker sent $414 million of the billion dollars to the richest 5 percent of Oregon households - those with incomes of at least $181,000. Now that a recession has arrived, Oregon needs that kicker money back. A targeted tax increase can do that.
"Another good option is to raise revenue from those profitable, large corporations, most of which are located out of state, who today escape paying their fair share of Oregon's taxes. ... Profitable corporations operating in Oregon now pay less than half of what they paid 30 years ago in corporate income taxes as a share of the economy."
Just as predictably, Republicans in the Legislature insist we have a spending crisis, not a revenue crisis, and call for cutting spending and taxes.
"Spending in 2007 was unsustainable, and now the Legislature is facing difficult decisions in 2009," writes House Republican Leader Bruce Hanna on the Republican blog Oregon Catalyst. "It is time to bring government spending back under control, and to pass measures to keep dollars flowing through our economy and to keep capital within our state."
"Rather than finding new ways to extract more money from Oregonians, we will work to put more money back into their pockets and back into the economy," Hanna added. "The Legislature must create a better environment for businesses that helps them succeed and create jobs."
Interestingly enough, though, despite constant laments from Republicans and corporations about how "hostile" the state is to business, Oregon pretty consistently ranks among the top states in business friendliness, at least as far as taxation goes.
"Oregon ranked ninth in the nation in the [conservative] Tax Foundation's 2009 State Business Tax Climate Index," The Oregonian reported less than two months ago. "California inched past New Jersey and New York for 48th place. Oregon consistently has made the top 10 -- largely because the state charges no sales tax."