In the myopic statist worldview, increasing taxes on “the rich” simply means more money for benevolent politicians to spread about, with little or no effect on those rich people. Here’s a letter in today’s Wall Street Journal about the impact of a recent tax increase in Oregon showing how mistaken that idea is:
Your editorial only covers the tip of the iceberg. In April 2010, a local Oregon paper reported on the sale of O’Keeffe’s Co., a successful small business that had been started and operated throughout its 16-year history in a small central Oregon community. The business had grown to provide employment for 20 other Oregon residents. The entrepreneur was recognized in 2009 as the Small Business Administration’s Small Business Person of the Year for Oregon.
The acquiring company immediately closed the operation in Oregon and moved the production out of state. Tara O’Keefe, the former owner, was quoted as saying that both the decision to sell the business and the acquiring company’s choice to move the operations were impacted by the voters’ passage of the tax increases. Nineteen of the employees in Oregon lost their jobs. The state of Oregon also lost the taxes on these wages as well as never having the chance to collect the anticipated increased taxes on the owner’s income.
Your editorial points out that 10,000 fewer wealthy-taxpayer returns were reported than had been expected. Most likely the former owner is one of the “missing” wealthy returns. It’s reasonable to assume that many of the 9,999 other “missing” wealthy returns would also have been accompanied with a loss of jobs for ordinary Oregonians. This is a hidden multiplier which has a financial impact on state revenue, and both a financial and an emotional impact on the employees who have lost jobs.
Besides the painful loss of taxes from both wealthy and ordinary taxpayers, the state of Oregon must spend incremental funds in the form of unemployment compensation for all the unfortunate workers who lost their jobs solely because the mostly liberal voters in Oregon thought they could solve the state’s problems by soaking the wealthy. There is little comfort for the unfortunate formerly employed wage earners whose tax rates are unchanged, but who see their wages go to zero.
Russell Gesme
Frankfort, Mich.
