Trying to Kill Jobs?

UFCW is supporting a ballot measure in Oregon to hike business taxes by $3 billion, the largest tax hike in state history. According to a government report, the regressive tax would likely lower incomes, raise prices, and kill jobs.

Measure 97 would be the biggest tax increase in Oregon’s history, generating an estimated $3 billion a year for public education and other state services.

The initiative would levy a 2.5 percent tax on many companies’ Oregon sales over $25 million. But Measure 97 exempts some types of businesses and applies differently to others…

Economists say how much businesses pass along would depend on their market power. Cable television companies, for example, may pass along much of the cost. Private utilities such as Portland General Electric have regulated monopolies and a legal right to pass along higher costs – including taxes – to ratepayers.

Other states exempt wholesalers from consumption and sales taxes, or they tax wholesale trade at a lower rate. Because Measure 97 does not, some economists expect a “pyramiding” effect in which added costs are stacked atop one another for some products and services.

Conventional sales taxes in other states usually exempt food from taxation. Measure 97 does not. So if businesses do pass along higher costs, it could produce higher grocery bills.

The legislative study — which was based on an approximation of Measure 97 — concluded it would both dampen wage growth and raise prices.