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State sales tax will fail without a tax cut elsewhere


In Oregon, when lawmakers start talking about a sales tax, people tend to vehemently resist such a notion — and history suggests they always have.

Since the 1930s, Oregonians have voted down nine attempts to institute a sales tax.

Yet the Washington Post recently reported that Governor John Kitzhaber and other legislators are considering the idea again. The idea is to diversify the revenue streams, so that the state does not have to rely so heavily on income tax revenue, which declined significantly during the latest recession.

We can certainly understand where they are coming from when it comes to creating a more reliable funding stream. Taxing goods and services that must be purchased whether a person is employed or not would probably result in fewer ebbs and flows in revenue.

The problem is that near as we can tell, they would be adding a new tax in a state that is already considered one of the most taxed in the nation. Why wouldn’t citizens, who are still dealing with the impacts of the recession, reject a sales tax again?

What state lawmakers need to realize is that you have to give residents some incentive to approve a sales tax. We believe that the only way that a sales tax will ever be supported in Oregon is if you eliminate the individual tax burden elsewhere. The best way to do that is to forego the income tax.

Not only would legislators have to eliminate the income tax, they would have to do so with a constitutional amendment that guarantees residents that the state won’t reinstitute it if revenue streams underperform.

Even if the state dropped the income tax to entice approval of a sales tax, we still think it would be a tough sell in Oregon. Yes, revenue diversity is good for state services, but Oregon is currently sitting on $2 billion more revenue than they have everhad. It’s hard to argue in favor of any new tax in that instance, and especially one that raises people's hackles like the sales tax.

We encourage the state to keep looking for ways to diversify tax revenue and overhaul the state tax code. What we don’t encourage is another tax — one we are almost certain Oregon would reject for a tenth time.