West Linn Tidings

By Rep Scott Bruun

As a small child I remember my Grandma Ilene, a constant worrier, pleading with those of us in her family to be careful whenever we visited Oregon’s beaches.

Warnings about slippery rocks, drift logs and sea lions were often mentioned. But her constant warning, without fail, was that we watch out for “sneaker” waves by never turning our backs on the ocean. Sage advice.

As Oregonians ponder Measures 66 and 67, and decide whether tax increases are the path to take during widespread economic downturn and job loss, we would be well advised to consider Ilene’s warning: Watch out for the sneaker wave headed our way.

The sneaker wave of federal tax increases that will, barring action by this current congress, occur after 2010.

We forget but in 2001 and 2003, to address the economic downturn caused by the tech bubble and 9/11, congress moved to reduce certain taxes. To incentivize job creation and economic growth, congress reduced tax rates on work, capital gains, equipment investments, dividends and inheritances. And it worked. Rate reductions spurred economic growth and investment that held constant until the rug was pulled out from under all of us by the housing bubble, poor credit standards and faulty regulatory oversight.

Given its policies and politics, it seems likely that our current congress will let tax rate reductions expire in 2010 without much mention or notice. What this means is that top federal income tax rates will go from 35 to 39.6 percent, capital gains rates from 15 to 20 percent, and inheritance taxes from zero this year, to 55 percent in 2011. Even the current $1,000 per child tax credit will fall to $500 in 2011. All of which will create a major burden for job creation, innovation, investment and economic growth in America going forward.

Here of course, Oregon fares no better or worse than other states. Everyone across the country would pay more, and America’s economic engine as a whole suffers.

But these federal tax increases, combined with the increase proposals in Measures 66 and 67, would put Oregon’s workers, families and small businesses in a uniquely difficult situation. These increases mean that in less than one year, the combined top income tax rate for Oregonians will go from 44 to 50.6 percent, capital gains from 24 to 29 percent, and business tax rates from 41.6 to 47.5 percent.

Taxes matter; they effect decisions to work, save, invest and consume.

Increased combined tax rates will negatively affect these factors, and further burden Oregon’s comparative advantages. While we may not have much influence on congress and those federal rates, we do control our destiny when it comes to Oregon’s rates – and ultimately the message we send to job creators across the globe.

I have no idea how Ilene would have voted, God rest her soul. But as we consider what to do on 66 and 67, I hope we remember her advice: Carefully negotiate the logs and slippery rocks we do see, and be mindful to not forget the sneaker wave behind us.

Vote no on 66 and 67 so Oregon’s workers, families and employers are better prepared for the federal wave coming.

State Rep. Scott Bruun, R-West Linn, represents District 37, which includes West Linn, Tualatin, Lake Oswego, Rivergrove, Stafford and Durham.