You are using an outdated browser.
Please upgrade your browser
and improve your visit to our site.
Skip Navigation

Debunking the Journal, Oregon Edition

The Wall Street Journal returns to one of its favorite arguments:

Oregon raised its income tax on the richest 2% of its residents last year to fix its budget hole, but now the state treasury admits it collected nearly one-third less revenue than the bean counters projected. The sun also rose in the east, and the Cubs didn't win the World Series. [...]
One reason revenues are so low is that about one-quarter of the rich tax filers seem to have gone missing. The state expected 38,000 Oregonians to pay the higher tax, but only 28,000 did. Funny how that always happens. These numbers are in line with a Cascade Policy Institute study, based on interstate migration patterns, predicting that the tax surcharge would lead to 80,000 fewer wealthy tax filers in Oregon over the next decade.

Funny, indeed. Unfortunately, as the Oregon Center for Public Policy's Chuck Sheketoff says, "the claim is just baseless":

First, although Measure 66 applied to 2009 income, voters didn’t approve them until January 2010. For The Wall Street Journal’s claim to be true, 10,000 wealthy Oregonians would have had to master time travel and leave the state retroactively to avoid the 2009 tax.
Second, the total number of tax returns filed in 2009 is greater — not less — than what the state had predicted in May of 2009. That doesn’t suggest out migration.
The explanation for why in 2009 there were actually 10,000 fewer tax returns subject to the new rates than had been projected in mid-2009 is obvious: the Great Recession was worse than the state economists had thought in mid-2009. The recession caused income for all income groups to fall further than they anticipated. Those at the top and subject to the new tax rates — those who derive a greater portion of their income from capital gains — saw a particularly sharp decline. The Legislative Revenue Office noted last week that the May 2009 forecast for total income was off by 7 percent. The primary reason that tax dollars coming from Measure 66 were down 28 percent from the forecast is that the capital gains component of total revenue was down 43 percent from the projected level.
Yes, there were “fewer filers affected” by the measure than originally expected, but that just means that the income decline caused by the Great Recession took some people below the new tax thresholds. It says nothing about migration of taxpayers out of state.
The Wall Street Journal’s suggestion that there’s a causal link between the new tax and Oregon’s revenues being below projections or fewer filers in the relevant income brackets is tantamount to saying that “increased global temperatures during a time when the number of pirates declined shows that the decline of pirates caused global warming.” My ten year-old (who has had his own fantasies with pirates) knows better.