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EDITORIAL: No time for complacency on tax reform, job creation [The Oregonian, Portland, Ore.](Oregonian (Portland, OR) Via Acquire Media NewsEdge) Sept. 20--Sen. Mark Hass, D-Beaverton, who has been one of the Oregon Legislature's biggest proponents of tax reform, offers a straightforward argument for tackling the politically dangerous task: "If Oregon was just admitted as a state yesterday, and today we had to write a tax code, would we write it like the one we have?" he asks. It gets harder every day to answer that question any way other than no. Yet, Hass says, pollsters say one of the reasons that opinion surveys show limited support for tax reform is that many Oregonians don't see a problem with the current system, especially if they don't have children in school. Similarly, a political poll released Wednesday shows that voters in the Portland metro area and Marion County place significantly less importance on economic issues than they did in a similar 2011 poll. It's not surprising that the public and political enthusiasm for job creation and tax reform is waning as the economy improves. The need for both becomes more obvious when unemployment is in double digits. But the underlying problems that weakened Oregon's economy when the unemployment rate was more than 11 percent largely still exist with unemployment at 7.2 percent. And 7.2 percent is far too high for complacency anyway. In fact, the biggest cracks in Oregon's economic foundation haven't changed much in more than two decades. Timber harvests and employment began a long decline in the late 1980s, followed by ballot initiatives in the 1990s that drastically altered Oregon's tax structure by putting limits on Oregon property assessments. While the growth of the high-tech industry has to some degree offset the loss of timber jobs, the primary beneficiaries of the technology boom have been well-educated workers in the Portland area. Meanwhile, the state has done little to adjust the tax structure, a failure that has created inequities and left public education with an unstable funding system. Those flaws become more obvious during a recession, but they won't disappear as the economy improves. In fact, other problems loom. A report by Standard & Poor's, released last week, details the effects of growing income inequality on tax collections. In short, it's more important than ever to have a diversified tax base. Meanwhile, the outlook for job growth in the semiconductor industry -- while not as dismal as that for wood products -- is less than encouraging. In fact, the Oregon Office of Economic Analysis recently studied Oregon employment projections and concluded that the sectors (including semiconductor manufacturing and several forest-products employers) that provide the most Oregon jobs are among those expected to have the slowest job growth. The political climate for tax reform also has become more challenging because of Cover Oregon's spectacular failure. After watching Gov. John Kitzhaber's signature project crash before launching, taxpayers have every reason to be suspicious of another reform effort with even more potential to affect their pocketbooks. In this environment, the 2015 Legislature is more likely to take a modest approach to tax reform rather than the ambitious overhaul Kitzhaber pondered when he put together a reform task force. Sen. Ginny Burdick, D-Portland, a longtime advocate of tax reform, suggests that changing the personal kicker, which returns money to taxpayers when revenues exceed forecasts by 2 percent or more, could be doable. Just nibbling around the edges of reform would be a mistake -- the equivalent of strategically placing a bucket to catch water dripping from the ceiling instead of repairing the roof. Politicians and policy-makers with varied partisan leanings have made all types of arguments through the years why Oregon's dependence on the income tax to fund public services is unwise: It's too volatile, short-changes schools, encourages high-wage earners to live elsewhere, gives tourists a free ride, etc. If those arguments are accurate -- and to some degree they are -- why ignore the ailment just because the pain has eased temporarily? No one knows when Oregon's next economic storm will come, but this much is certain: If the Legislature ignores job creation and tax reform, the state's economic roof still will leak. --The Oregonian editorial board ___ (c)2014 The Oregonian (Portland, Ore.) Visit The Oregonian (Portland, Ore.) at www.oregonian.com Distributed by MCT Information Services |